- Who handles it
- Florida Department of Revenue, which administers reemployment tax with FloridaCommerce
- What you file
- Report to Determine Succession and Application for Transfer of Experience Rating Records, Form RTS-1S
- When
- Filed around the change of ownership, after the buyer has registered as an employer
Easy to miss: A successor can be responsible for past due amounts and can inherit benefit charges. Ask for a payoff before you close.
What the Tax Is
Employers in Florida pay reemployment tax, the state's unemployment insurance. Each employer has a rate based in part on how many former workers drew benefits. A low rate is worth real money, so buyers care whether they inherit it.
The account can also carry unpaid tax, penalties or a reporting problem, which buyers care about just as much.
What Succession Means
When someone acquires all or part of a business and keeps its operations, the state may treat the buyer as a successor. A successor can take on the seller's tax rating and, with it, responsibility for what the seller left unpaid.
In some cases of common ownership the transfer of the rating is required. In others it is voluntary.
The Form
The report is filed on Form RTS-1S. It asks about the sale, the date, which part of the business was acquired and the workers who moved to the buyer. The buyer registers as an employer first, then the two sides complete the report.
Ask your CPA or the state office whether the buyer should accept the seller's rate or start fresh.
What Sellers Do
- File all payroll tax reports through the date of sale
- Pay balances and clear any notice
- Give the buyer final payroll and benefit charge records
- Close the account after the final return, and keep proof
Unpaid amounts can follow the business, so a buyer often asks for a payoff letter.
Common Problems
Misclassified workers, late reports and old benefit claims are the usual snags. A buyer who finds them may reduce the price or hold back money. Clean these up early.
Employers with contractors should check whether those workers are really employees, because a state audit can change the history.
Related Closing Steps
Sales tax has its own clearance in the certificate of compliance, and licensed health care companies also file with AHCA, as in AHCA change of ownership.
Why Buyers Look at the Rate
Two agencies of similar size can pay very different rates. An agency with few layoffs may have a low rate that a buyer wants to keep, while one with many past claims may have a high rate that a buyer would rather leave behind.
Compare the rate with what a new employer would pay, then decide with your CPA whether taking the transfer helps.
Timing With Payroll
Change payroll providers and tax accounts on a clear date, usually the first day of a pay period. Overlapping or missing reports in the quarter of the sale are a common cause of notices.
Ask your payroll provider to produce a final summary the buyer can rely on.
Sources and Advice
The Florida Department of Revenue posts reemployment tax forms and instructions, and FloridaCommerce handles benefits.
This page is general information, not tax or legal advice, so confirm with your CPA or attorney. When you are ready to see a range, request a private estimate.