Monthly Wage Reporting
Relief for Eligible Employers from Penalties and Interest in Wage Reporting
To fight theft in and abuse of benefit programs such as Medicaid and unemployment insurance, Illinois lawmakers required certain employers to submit wage reports on a monthly basis. Previously, all employers were required to report wage information quarterly. Electronic and monthly wage reporting have the potential to stop improper payments before they are issued and save Illinois taxpayers hundreds of millions of dollars each year. These savings help reduce unemployment insurance tax rates.
The Department adopted rulemaking, agreed to by the business and labor communities, which required the electronic submission of monthly wage reports from employers of 25 or more in 2013 and phased in the Medicaid reform legislation’s monthly reporting requirement through July 2014.
Though the Department had informed employers through direct mail, email, media reports and through trade groups of this rule change, some employers genuinely misunderstood the implementation schedule for the new electronic reporting requirement and assumed it was the same as the schedule for monthly reporting. Additionally, some employers experienced problems transitioning to monthly reporting, despite their good faith efforts, and many incurred penalties and associated interest charges as a result.
To address this issue, the Department has implemented new rules to help employers with wage report submissions:
- Remove penalties and interest employers incurred as a result of confusion over the new electronic reporting requirement’s implementation schedule. The rule retroactively implements requirement on the same schedule as that for the monthly reporting requirement.
- Waive up to the first two quarters’ worth of penalties, along with any related interest, for late monthly reports, as long as the employer timely submitted quarterly reports.
The Department will automatically remove penalties and interest to the extent the new rules permit. The Department’s IT division is expected to implement the automated system within the next six months. In the interim, some employers will continue to see the penalties and interest on their quarterly Statements of Account. Once the system change is complete, the Department will notify Employers of any penalties and interest that were waived or otherwise removed. If the employer already paid the penalties and interest, the payment can be credited towards future liabilities. If an employer has requested a waiver of a penalty but the new rules do not permit automatic removal of that penalty, the Department will process the waiver request to determine if there is some other basis for a waiver. The employer will have the right to appeal any unfavorable decision.
To expedite the removal of the penalties and interest, employers should use TaxNet. We appreciate your patience and your help in fighting unemployment insurance benefit fraud. For further information please call the Employer Hotline at (800) 247-4984.
The Medicaid Reform "SMART" Act was designed to root out waste, fraud and abuse in the State's Medicaid program. It requires monthly wage reports from employers who are required to submit their contribution and wage reports electronically.
Employers with 25 or more employees required to file quarterly and monthly wage reports (starts July 25)
If your company has reported a total of 25 or more employees for the calendar year of 2014, you will be required to file monthly and quarterly electronic wage reports for the period beginning July 2015 and continuing through June 2016. Note that if you had a total of 25 or more employees in 2012 and 2013, you are currently subject to this requirement through June 2015.
Monthly wage reporting is a key tool in fighting fraud and decreasing unemployment insurance tax rates. Please see below guide:
- Monthly Electronic Reports
- Required for the first and second months of each quarter: July, August, October, November, January, February, April and May
- Should contain only employee names, social security numbers and each employee’s total wages for the period being reported
- Unemployment insurance contributions are not calculated or remitted
- Failure to submit in an electronic format through Illinois TaxNet will result in a penalty.
- Quarterly Electronic Reports
- Required for the full quarter, which also covers the filing requirement for the months of September, December, March & June
- Unemployment insurance contributions are calculated and remitted
- Failure to submit in required electronic formats – Illinois TaxNet, FSET (through QuickBooks or other vendor software) or FTP (used by large service bureaus or employers) – will result in a penalty
Phase in Period
Effective Dates (based on # of Employees)
250 or more - January 2013
100 - 249 - July 2013
50 - 99 - January 2014
25 - 49 - July 2014
Monthly wage filing must be done via TaxNet, the Department's online tax filing / wage reporting application. Employers that are already registered on TaxNet can file using their existing TaxNet account.
Recommended Browser: The TaxNet web application is best viewed with Internet Explorer
TaxNet will only accept a comma separated (.csv) plain ASCII text format file for the monthly wage report. A file can contain a single employer or multiple employers.
Please note: There will NOT be a manual entry option for the monthly wage reports.
File Format Guide
Call the IDES TaxNet Hotline, toll free at (800) 247-4984 for TaxNet related questions, or contact IDES in writing