Unemployment Comp, Owner

[geekgirldany]

I have a client that said there was a possibilty that they would be closing their business. He asked if he could get Unemployment Comp from where the s-corp paid it in for his officer's salary. I've never really heard of anyone doing it.... could he?

[Uncle Sam]

Unemployment Com. Owner

You need to check that out with the state unemployment insurance office.

If it's true-and it probably is-because I tried this a couple of times in my state (New York)-unfortunately he's out of luck.

I know that it's unfair - he pays the contribution based on his corporate salary - but since he's a "control" person - the unemployment insurance see it as a conflict of interest.

I even tried submitting a letter on my business letterhead stating that the business closed - is no longer in business, etc etc - the request still got denied.

[JohnH]

I guess it depends upon the state. It's perfectly legal & accepted practice in NC, provided the corp officer/shareholder is actually unemployed. The standard of proof may sometimes be a little higher, but they are eligible.

I'm just curious here, but what would happen if the officer/shareholder signed over ownership to a spouse & resigned as an officer of the company just prior to shutting down? Then the spouse could legally sign the unemployment paperwork. Not suggesting anything illegal here - the ownership, director, and officer change would probably need to be handled under the direction of an attorney. But if the end result were several months of unemployment compensation and no concerns about the experience rating going up in the future (since the business is shutting down), it might be well worth the cost of the legal advice to get it done.

[S T]

Doesn't hurt to try

Depends on the State - Uncle Sam is correct, they force the UI contributions on the shareholder, and rarely can they collect.

However, I did have one in California in 2007 that closed their S Corp - and the one shareholder that acted as a Manager at the place of business, actually collected the maximum amount, much the same as any employee.

I guess it is all in the representative that you talk to and how it is presented.

Good Luck,

Sandy

[Corduroy Frog]

Both Sides of Their Mouth

Simple country logic: If the corporation is liable for SUTA and FUTA on a shareholders' salary, then he should be eligible for unemployment.

If the state is unwilling to pay a corporate owner if he is truly unemployed, then the shareholders' salary should be exempt from SUTA.

[geekgirldany]

Thank you all for posting. I'll tell them to contact the unemployment office in Georgia. I'll tell you what they find out just for discussion purposes. I don't really think they can get it though.

[ChEAr$]

Be sure

Thank you all for posting. I'll tell them to contact the unemployment office in Georgia. I'll tell you what they find out just for discussion purposes. I don't really think they can get it though.

to post the answers, for IMWTK.

Last time I checked with both Alabama and Georgia, it was verboten.
But that has been some time ago.

[geekgirldany]

Thanks, I'll tell them that I think it is not possible but they can try. I had to look up "verboten" lol

[Black Bart]

1120S unemployment

I have a client that said there was a possibilty that they would be closing their business. He asked if he could get Unemployment Comp from where the s-corp paid it in for his officer's salary. I've never really heard of anyone doing it.... could he?

Like the other folks say, it probably depends on which state (and maybe the disposition/smarts of the processing clerk). I know it's been tried here (Arkansas) 'cause one of my clients put in an app, but I never heard if he got it or not. Somebody at our Dep't. of Employment Security had made him mad, so he decided to get even by drawing unemployment. It was pretty funny the way he put it: "I'll show 'em; I'm layin' myself off."

[ChEAr$]

Scuse me!

Thanks, I'll tell them that I think it is not possible but they can try. I had to look up "verboten" lol

Got carried away there with the German. Even now am listening to German songs and marches and looking forward to next Tuesday in Berlin.

As they say in Southern Germany,
Auf Wiedersehn, y'all

[BOB W]

In the past NY had a "look at the details proceedure" of closure issues. Was there a filing for bankrupsy and no assets taken from the Corporation. A review of the last two years for unusual distributions or transactions, if no bankrupsy was filed. If the business owner rec'd NO benefit and is pennyless, he gets UI. Otherwise he gets nothing.

I don't think this had changed and is still in force. Most states would have a tough time under these circumstances denying UI benefits. The issues needs to be pushed, much like trying to collect SS Disability, every one is initially turned down.