Unemployment Insurance - Employer Services

Unemployment is an insurance program providing temporary, partial wage replacement to workers who are unemployed through no fault of their own. The program is funded by Unemployment premiums paid by employers based on the amount of wages paid for covered employment. The Unemployment Premium or "tax" is paid on the first $12,000 only in gross wages an employer pays to an individual in a calendar year.

*** Changes to Unemployment Tax Billing for Employers for Tax Periods Beginning on or After January 1, 2015 ***

Maine Combined Withholding and Unemployment Contributions Form 941/C1-ME will be eliminated and replaced with the following separate forms: the existing Maine Withholding Form 941ME and the new Unemployment Contributions Form ME UC-1. Although the forms and instructions will be separated beginning in 2015, Maine Revenue Services will continue to process the unemployment contributions forms and payments on behalf of the Maine Department of Labor. MRS will also continue to provide electronic filing and payment systems for the separate filings.

Questions about this change can be directed to Maine Revenue Services withholding unit at (207) 626-8475 (press 1 then 4 from the menu) or by emailing to withholding.tax@maine.gov.

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Links to Laws/Rules

  • Unemployment Tax Law, Title 26, Ch 13
  • Rules for Unemployment Security
  • Laws and Rules Governing Unemployment Benefits
  • Reasonable Compensation to S Corp Officers
    S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee. The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly.
    The instructions to the Form 1120S, U.S. Income Tax Return for an S Corporation, state "Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation."
    Several court cases support the authority of the IRS to reclassify other forms of payments to a shareholder-employee as a wage expense which are subject to employment taxes.