Rhode Island Department of Labor and Training



Unemployment Insurance Unit to team with IRS
to rout out questionable business practices


In a new, multi-state initiative, the RI Dept. of Labor and Training will share company employment records with the U.S. Internal Revenue Service in an effort to combat questionable employment tax practices. Questionable Employment Tax Practices, also known as QETPs, are defined as employment schemes or tax practices designed to evade state and/or federal employment or unemployment taxes. On November 6, Rhode Island will be among 29 states to sign a Memorandum of Understanding with the IRS regarding information-sharing.

Raymond Filippone, assistant director of Income Support at the RI Dept. of Labor and Training, states that QETPs include companies that have registered with the federal government but not with state government, thereby avoiding state taxes. He also says that some companies may classify themselves as multiple-employee businesses with the federal government but misclassify themselves as sole proprietorships with the state so that they can avoid payments to the unemployment insurance trust fund.

With the current systems, businesses skirting some taxation and reporting requirements are not caught until after employees file for unemployment insurance. “Now we can catch them before an employee contacts us with a claim,” says Filippone.

Adelita Orefice, director of the RI Dept. of Labor and Training, adds, “Prevention, detection, and elimination of abuse in the Unemployment Insurance program are top priorities for our department. We want to ensure that employers are paying only their fair share of employment taxes and are not subsidizing any dishonest employers.”

Unemployment Insurance compensates workers who are unemployed through no fault of their own and are actively seeking work. The program is funded through state and federal employment taxes. The taxes are paid by employers and the tax rates are based on the balance in the Unemployment Insurance Trust Fund, the mechanism by which Unemployment Insurance benefits are paid.

The RI Dept. of Labor and Training offers employment services, educational services and economic opportunity to both individuals and employers. DLT also protects Rhode Island’s workforce; oversees the enforcement of labor laws, prevailing wage rates and workplace health and safety standards; and provides temporary income support to unemployed, sick or injured workers. For more information on the programs and services available to all Rhode Islanders, please call the RI Dept. of Labor and Training at (401) 462-8000 or visit the web site at www.dlt.ri.gov.