Unemployment Insurance Tax (FUTA/SUTA); Workers' Compensation Payroll Assessment: New Mexico

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor, and Alice Gilman

Summary

• In New Mexico, a three-pronged test is used to determine who is considered a covered employee for unemployment tax purposes. Workers are presumed to be employees unless all three prongs apply. See Determining Coverage.
• New Mexico law defines wages for state unemployment insurance (SUI) purposes as all compensation paid for services provided. Wages are withheld for SUI up to the annual taxable wage base. See SUI Taxable Wages; Taxable Wage Base.
• SUI tax rates are determined according to the benefit ratio method. See Contribution Rates; Experience Rating Method.
• The New Mexico State Unemployment Tax Act (SUTA) Dumping law follows the federal Department of Labor model SUTA dumping law. See SUTA Dumping.
• New Mexico law permits employers to voluntarily pay an additional UI contribution to obtain a lower tax rate. The state also permits two or more employers that are eligible to make payments in lieu of contributions to file a joint application to establish a group account for the purpose of sharing the cost of benefits paid. See Voluntary Contributions; Joint or Combined Accounts.
• All employers are required to electronically file quarterly contribution and wage reports to report employee wages subject to SUI. See Quarterly Reporting Requirements.
• Employers are subject to penalties for filing quarterly contribution reports and payments late and for making false statements, or withholding information, in order to avoid or reduce the payment of taxes or benefits. See Penalties.
• Multiple worksite reporting is voluntary for New Mexico employers that operate businesses from more than one location under one Unemployment Insurance Account Number. See Multiple Worksite Reporting.
• Employers are required to keep payroll records that provide a true and accurate account of all workers and all payments made for at least four years. Records must include certain required information for each employee. See Recordkeeping Requirements.
• All employers that are required to obtain workers' compensation insurance, and employers that elect workers' compensation coverage, must withhold a quarterly assessment from their employees' pay to fund the Workers' Compensation Administration. Covered and electing employers also pay a fee. Employers must report and remit the amount withheld on a quarterly basis. Penalties may be imposed for noncompliance. See Workers' Compensation Payroll Assessment.