Employer's Guide to Unemployment Insurance Tax in Oklahoma

Everything employers need to know about paying unemployment insurance taxes in Oklahoma.

If your small business has employees working in Oklahoma, you’ll need to pay Oklahoma unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In Oklahoma, state UI tax is just one of several taxes that employers must pay. Other important employer taxes, not covered here, include federal UI tax, and state and federal withholding taxes.

Different states have different rules and rates for UI taxes. Here are the basic rules for Oklahoma’s UI tax.

Note: Oklahoma often refers to UI tax as unemployment compensation tax.

Register With the Employment Security Commission

As an Oklahoma employer, you are required to register your small business with the Oklahoma Employment Security Commission (OESC). Following registration, and once your business becomes liable for UI tax, you will be assigned a UI tax account number. You can register for an account with OESC either online or on paper. To register online, use the EZ Tax Express website. To register on paper, use Form OES-1, Application for Oklahoma UI Tax Account Number. Blank forms are available for download from the Forms section of the OESC website. There is no fee to register your business with IDES.

Note: To establish your Oklahoma UI tax account, you’ll need a federal employer identification number (EIN). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.

Rules for UI Tax Liability

As a for-profit employer in Oklahoma, you generally are liable for state UI taxes if you meet any of the following criteria:

  • you pay $1,500 in wages in a calendar quarter
  • you employ one or more employees for any portion of a week for any 20 weeks in a calendar year, or
  • you acquire substantially all of another business that is liable for UI taxes.

These are effectively the same rules that apply for liability under the Federal Unemployment Tax Act (FUTA). Different rules, not covered here, apply to agricultural (farm) workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.

One piece of good news is that state UI tax payments generally can be credited against your FUTA taxes.

Wage Base and Tax Rates

UI tax is paid on each employee’s wages up to a maximum annual amount. That amount, known as the taxable wage base, goes up or down every year in Oklahoma. Over the last decade, it has ranged from around $13,000 to around $20,000.

The state UI tax rate for new employers, known as the standard beginning tax rate, also changes from one year to the next. Over the last decade, it generally has been somewhere between 1% and 2.4%. Established employers are subject to a lower or higher rate than new employers depending on an “experience rating.” This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.

For current and historical information on wage bases and tax rates, check the OESC’s online table.

File Quarterly UI Tax Reports and Payments

In Oklahoma, UI tax reports and payments are due by the last day of the month following the end of the calendar quarter. In other words, reports and payments are due as follows:

Quarter

Months Covered

Due Date

First

January, February, March

April 30

Second

April, May, June

July 31

Third

July, August, September

October 31

Fourth

October, November, December

January 31

You must file your reports online. Use the EZ Tax Express website. (The paper version of the quarterly filing, Form OES-3, Employer’s Quarterly Contribution Report, is no longer available.) You can pay online using Electronic Funds Transfer (EFT) or print out a remittance voucher and pay by check.

You will be subject to a penalty if you fail to file.

Post a Notice (Poster)

You are required to post a notice (poster) regarding state unemployment claims in a conspicuous place for all employees. The poster states that employees may be entitled to receive UI benefits if they lose their job or work less than full time, and provides basic information on how to file an unemployment claim. You can download a notice—Form OES-44, Notice to Workers—from the Labor Law Posters section of the OESC website that meets all legal requirements.

Do Not Misclassify Employees as Independent Contractors

Employers who use independent contractors rather than hiring employees are not subject to the UI tax. However, it’s important that you do not misclassify an employee as an independent contractor. If you do misclassify an employee, you could be subject to penalties or fines.

Using Payroll Service Companies

You may decide that it’s easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.

Additional Information

This article touches on only the most basic elements of Oklahoma UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and OESC websites for the latest information. OESC also publishesUnemployment Insurance: An Employer's Guide to Unemployment Insurance Compensation, Employer UI Taxes, Benefit Wage Charges, New Hire Reporting and more, which you can download from the OESC website. In addition to state UI tax, employers have other responsibilities not covered in this article such as federal UI tax, state and federal withholding taxes, and required reporting of new hires. You can get more information about other small business tax issues in other articles here on Nolo.com.

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