New Hampshire Payroll Tax Nonpayment Emergency
Checklist
Unemployment tax nonpayment in New Hampshire occurs when an employer fails to deposit or remit required unemployment insurance contributions to New Hampshire
Employment Security (NHES). Unlike most states, New Hampshire does not impose
state income tax on wages, so there is no employee wage withholding for state income tax purposes. The only state-level payroll-related tax obligation is State Unemployment
Insurance, which employers pay directly to NHES to fund the unemployment trust fund.
This payroll tax is separate from federal obligations such as Social Security contributions and FICA taxes. When these payments are not made on time or at all,
NHES takes collection steps to recover the debt. Failing to pay unemployment tax can result in significant penalties, interest charges, and potential legal action that may be more severe than issues related to property tax or other state taxes.
What This Issue Means
Unemployment tax nonpayment means that required unemployment insurance contributions have not been submitted to New Hampshire Employment Security by the required deadline. This is distinct from simply filing a quarterly report late; it involves actual money owed to the state that funds unemployment benefits for eligible individuals who lose their jobs. NHES treats this as a serious compliance matter because these funds support the state's unemployment insurance program and ensure that unemployment insurance benefits remain available to workers who qualify under the
Federal Unemployment Tax Act and state requirements.
Why the State Requires This
New Hampshire Employment Security requires employers to pay unemployment insurance contributions quarterly. Every employer must file a Tax and Wage Report for each calendar quarter in which they provide employment. New employers start with a tax rate of 2.7% on the first $14,000 of annual wages paid to each employee, which represents the state wage base; this rate may be subject to any Fund Balance
Reductions currently in effect (which can reduce the effective rate to 1.7%). The wage base determines the maximum amount of an employee's earnings subject to unemployment tax.
After the first year, tax rates are adjusted based on the employer's experience rating and contributions to the state unemployment trust fund accounts. NHES issues this requirement because employers are responsible for funding the state's unemployment insurance system through federal FUTA tax and state unemployment contributions.
Common triggers for nonpayment include cash flow problems, payroll processing errors, changes in business ownership or management, or confusion about which workers qualify (such as misclassifying employees as independent contractors).
What Happens If This Is Ignored
If nonpayment of the unemployment tax is ignored, NHES typically escalates collection efforts through a series of notices and actions similar to how local governments pursue unpaid property tax bills. Missing payroll tax deadlines results in immediate financial consequences: a 10% penalty is applied to any unpaid amount, and 1% interest accrues every month on the outstanding balance until full payment is received. These interest charges accumulate similarly to how property owners face mounting costs on delinquent tax bills from the tax collector.
NHES may pursue more aggressive collection methods if the debt remains unpaid, potentially including liens against business property or legal collection proceedings. In some cases, responsible parties (such as officers or owners) may face personal liability.
The longer the debt remains unpaid, the more severe the collection methods typically become, potentially escalating beyond standard collection to property seizure in extreme cases.
What This Does NOT Mean
Unemployment tax nonpayment does not automatically mean criminal charges will be filed, though serious or repeated nonpayment can result in referral for legal action. It does not mean your business license has been automatically suspended or revoked, though NHES may pursue such action if collection efforts are unsuccessful. Simply receiving a notice does not mean a lien has already been placed or that seizure of assets is imminent.
NHES has not yet taken all possible collection actions at the notice stage. You still have the opportunity to address the issue and work toward a resolution. Additionally, this issue is separate from federal payroll tax obligations handled by the Internal Revenue
Service and does not affect Social Security or Workers' Compensation insurance; it relates only to state unemployment insurance administered by NHES, not the
Department of Health and Human Services or other state agencies.
Checklist: What to Do After Receiving This or Identifying
This Issue
Step 1: Gather All Unemployment Tax Documents and Correspondence
Collect every notice, letter, or document NHES has sent regarding this issue. Locate your quarterly Tax and Wage Reports, payment receipts, and bank account statements showing unemployment tax transactions. Find any correspondence from your payroll processor or accountant related to NH labor laws compliance. Organize these documents in chronological order. Having complete records helps you understand precisely what periods are affected and what amounts are in question.
Step 2: Calculate the Total Amount Owed
Review the most recent notice from NHES to determine the exact amount owed, including taxes, penalties, and interest charges. If multiple notices have been received, identify the most current one. Verify whether the amount includes all outstanding quarters and confirm that all employees were properly classified according to the New
Hampshire New Hire Reporting Law (not independent contractors who would be exempt from unemployment insurance contributions). If you have questions about how the amount was calculated based on the state wage base, note those questions for when you contact NHES.
Step 3: Verify Your Account Status with NHES
Contact New Hampshire Employment Security directly to confirm the current status of your unemployment tax account. You can access the NHES WebTax System online or call the Tax Services line at (603) 228-4042, option 1. Ask whether additional periods beyond those listed in recent notices are also unpaid and verify that your account reflects accurate information under the Fair Credit Reporting Act. Inquire about any upcoming deadlines or required actions. This step ensures you have the most current information and prevents surprises later in the process.
Step 4: Contact New Hampshire Employment Security
Reach out to NHES as soon as possible after identifying the issue. Explain the situation and discuss the reason for nonpayment and your business's current financial situation.
Ask what payment options or arrangements are available and whether any tax credits apply to your account. Request written confirmation of any discussions or agreements made during this contact. Being proactive and communicating openly with NHES demonstrates good faith and may lead to greater flexibility in resolving the debt.
Step 5: Ask About Payment Plans or Installment Agreements
Inquire whether NHES offers payment plans for unemployment tax debts, similar to how some local governments provide arrangements for property tax collection. Ask about the terms, including monthly payment amounts, additional fees, and the total repayment period. Determine whether a payment plan requires formal approval or agreement, and whether completing an application form is necessary. Request any forms needed to set up a payment arrangement. Understanding available options helps you identify realistic paths forward and avoid further penalties.
Step 6: If You Dispute the Amount, Request a Review
If you believe the calculation contains errors (such as incorrect classification of workers who should be independent contractors or miscalculated wage base amounts), ask how to request a formal review or correction. Provide documentation or evidence to support your dispute, ensuring compliance with the Fair Credit Reporting Act if the disagreement involves background information. Understand the deadline for requesting a review and whether a review request pauses collection action. Submit any dispute request in writing and keep copies of all correspondence. NHES has an appeals process for employer liability and tax determinations that follows procedures outlined in state law.
Step 7: Review Your Payroll Processing Procedures
Examine how unemployment taxes are currently being handled in your business and ensure compliance with NH labor laws. Identify the person or process responsible for calculating and remitting unemployment taxes according to the quarterly schedule.
Determine whether errors in previous quarters were due to processing mistakes, miscommunication, or lack of oversight regarding the Fair Labor Standards Act or other employment regulations. Document any systemic issues that contributed to nonpayment. Resources such as the American Payroll Association guide proper payroll tax compliance. Taking this step helps prevent the issue from recurring and demonstrates to NHES that you are addressing the underlying problem.
Step 8: Consider Professional Assistance if Needed
Determine whether your business would benefit from working with a payroll service, accountant, or tax professional to manage unemployment taxes going forward.
Research New Hampshire-based professionals who specialize in payroll compliance and understand both state and federal requirements, including the Federal
Unemployment Tax Act. Ask whether current advisors can address the problems that led to nonpayment and ensure proper completion of forms such as the tax return and
Schedule C form for self-employment income. Some employers may also benefit from financial counseling to improve cash flow management. Evaluate the cost and benefit of professional assistance relative to your business's size and complexity.
Step 9: Make Your First Payment or Enter a Payment Arrangement
If a payment plan has been approved, make the first payment by the required date and through the method specified by NHES. If paying the full amount, submit payment through the NHES WebTax System, direct deposit, or as directed by NHES. Keep
detailed records of payments for your bank accounts, including the date, amount, method, and confirmation number. If paying through a plan, set up reminders to ensure payments are made on time each quarter. Consistent, timely payments demonstrate compliance and prevent further penalties or risk of property seizure.
- Missing NHES deadlines. If NHES has set a deadline to respond or make a
- Ignoring follow-up notices: NHES typically sends multiple notices before
- Providing incomplete information: If NHES requests documentation, business
- Assuming the issue is resolved without written confirmation: Do not
- Failing to update payroll procedures: If the same issue occurs again in future
- Not keeping records of payments or agreements: Without documentation,
- Misclassifying workers: Properly classify workers as employees versus
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 10: Document All Communications and Maintain Organized Records
Create a file containing all notices, correspondence, payment receipts, and agreements related to this unemployment tax issue. Keep copies of emails, notes from phone calls
(including date, time, and representative's name), and any written agreements. Record each contact with NHES in detail, maintaining documentation standards similar to those required under the New Hampshire Criminal History Access Law for recordkeeping.
Update this file regularly as the situation progresses. Organized documentation protects you and provides evidence of your efforts to resolve the issue if questions arise later.
What Happens After This Is Completed
After you have addressed the issue through payment, an approved payment plan, or a dispute resolution process, NHES typically acknowledges your action in writing. If a payment plan is in place, NHES monitors your compliance with scheduled payments.
Once all amounts owed have been paid, the agency updates its records to reflect that your account is resolved, as tax deed records are updated when property tax obligations are satisfied. NHES may take additional time to process the final resolution, but collection action typically pauses once a good-faith effort is made to address the debt.
Common Mistakes to Avoid payment, missing it can trigger more serious collection activities, similar to how missed property tax deadlines lead to tax deed proceedings. Mark all deadlines clearly and make contact with NHES before any deadline passes. escalating to more severe action. Each notice represents an opportunity to resolve the issue at an earlier stage, unlike property tax collection, where a tax deed or public auction may eventually occur. Treat every communication from
NHES as urgent. records, or financial information, incomplete submissions can delay resolution.
Provide exactly what is requested, including properly completed application forms and supporting documents. Ask for clarification if instructions are unclear. assume the problem is fixed based on a verbal conversation. Wait for written confirmation from NHES that the account is resolved before closing the matter, as property owners should verify that tax bills are satisfied with the tax collector. quarters, penalties and collection action will be more aggressive. After resolving current nonpayment, implement clear procedures to prevent recurrence and ensure proper classification of workers under NH labor laws. you cannot prove you have paid or followed a payment plan. Keep receipts and copies of all communications permanently in your bank account records. independent contractors according to the Fair Labor Standards Act and state guidelines. Misclassification can lead to underpayment of unemployment insurance contributions and additional penalties.
Frequently Asked Questions
Does New Hampshire charge interest on unpaid unemployment taxes?
Yes. Missing unemployment tax deadlines results in a 10% penalty on any unpaid amount, plus 1% interest that accrues every month on the outstanding balance until full payment is received. These interest charges are similar in structure to those applied to delinquent property tax bills by local governments.
Can NHES place a lien on my business property for unpaid unemployment taxes?
Yes. NHES has the authority to pursue liens and other collection methods if unemployment taxes remain unpaid, as property tax collection may result in tax deed filings. This typically occurs after notices have been issued and collection efforts have not resolved the debt.
Am I personally responsible for my business's unemployment tax debt?
Personal liability depends on your business structure and role. Owners, officers, and employees responsible for handling unemployment taxes may face personal liability under specific circumstances according to NH labor laws. Contact NHES or a tax professional for guidance specific to your situation.
What is the penalty for unemployment tax nonpayment in New Hampshire?
A 10% penalty is applied to any unpaid unemployment tax amount. Additionally, 1% interest accrues every month on the outstanding balance. These penalties are separate from any federal penalties that may apply under the Federal Unemployment Tax Act
(FUTA).
If my business is closing, am I still responsible for unpaid unemployment taxes?
Yes. Closing a business does not eliminate the obligation to pay outstanding unemployment taxes. The debt remains owed, and NHES may pursue collection action against business assets, remaining owners, or responsible parties, potentially including property seizure.
How long does NHES take to process a payment plan request?
Processing times vary. Contact NHES directly at (603) 228-4042, option 1, to ask about expected processing timeframes for your application form and payment plan request.
Can penalties be reduced if I pay the debt?
Penalty abatement may be available in certain circumstances. Ask NHES about penalty abatement options when you contact them about your account. Whether penalties can be reduced depends on the specific facts of your case and compliance history.
What happens if I cannot afford to pay the full amount or enter a payment plan?
If you cannot pay or a standard payment plan is not feasible, discuss your financial situation with NHES. Ask what alternatives or hardship options may be available.
Having an open conversation with NHES is preferable to ignoring the debt.
How do I ensure I correctly classify workers for unemployment insurance purposes?
Workers classified as independent contractors are generally not subject to unemployment insurance contributions under the Fair Labor Standards Act and state guidelines, while employees are covered. NHES provides guidance on proper worker classification under NH labor laws. Consult with a payroll professional or attorney if you are uncertain about classification.
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