Employer's Guide to Unemployment Insurance Tax in West Virginia

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

By , Contributing Author

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

Different states have different rules and rates for UC taxes. Here are the basic rules for West Virginia's UC tax.

Note: Unlike other states that refer to "unemployment insurance" or "UI" tax, West Virginia government offices generally use the terms "unemployment compensation" and "UC" tax.

Register With WorkForce West Virginia

As a West Virginia employer, your small business must register with the Unemployment Compensation Division (the Division) of WorkForce West Virginia (WFWV). Based on your registration information, the Division will determine if your business is liable for UC taxes. If it is, the Division will issue you a UC account number.

You can register with the Division either online or on paper. To register online, use the WV.gov Accounts website. To register on paper, you can use Form UC 201-B, Employer's Initial Statement. Blank forms are available for download in MS-Word format from the Employers section of the WorkForce West Virginia website.

You can also register for UC purposes as part of a more general registration of your business with the state for multiple tax and licensing purposes. To register your business generally with the state, use Form WV/Bus-App. You can download blank copies of this form from the Business Forms section of the West Virginia State Tax Department website. Make sure to complete the section covering employment.

There is no fee to register your business for UC purposes.

Note: To establish your West Virginia UC 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 Unemployment Compensation Tax Liability

As a for-profit employer in West Virginia, your business will be liable for state UC taxes if your business meets any of the following conditions:

  • it pays wages of $1,500 or more in any calendar quarter during the current or preceding calendar year
  • it employs at least one individual for some portion of a day in each of 20 different calendar weeks in either the current or preceding calendar year, and regardless of whether the weeks were consecutive or the same individual was employed each day
  • it acquires another business, or substantially all the assets of another business that is liable for UC taxes, or
  • it is or becomes liable under the Federal Unemployment Tax Act (FUTA).

The first three listed items are effectively the same rules that apply for liability under FUTA. So, in most cases, if your business is liable for federal unemployment taxes then it will also be liable for West Virginia unemployment taxes, and vice versa. 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 UC tax payments generally can be credited against your FUTA taxes.

Wage Base and Tax Rates

UC tax is paid on each employee's wages up to a maximum annual amount. In recent years, that amount, known as the taxable wage base, has been $12,000 in West Virginia. However, it's always possible the amount could change.

The state UC tax rate for new employers also is subject to change. However, in recent years, it has been 2.7%. 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.

File Quarterly UC Tax Reports and Payments

In West Virginia, UC tax reports and payments are due by the end of the month following the calendar quarter covered. In other words:

  • 1st Quarter returns and payments due on or before April 30
  • 2nd Quarter returns and payments due on or before July 31
  • 3rd Quarter returns and payments due on or before October 31, and
  • 4th Quarter returns and payments due on or before January 31.

You can file your reports and payments online or on paper. To file online, use West Virginia's Online Unemployment Compensation Employer Contribution System. To file on paper, use Form WVUC-A-154, Contribution Report, and Form WVUC-A-154A, Wage Report. The Division should mail you blank copies of these reports during the last month of each quarter. You can also contact the Division to ask for additional blank report forms.

You can pay online using Automated Clearing House (ACH) debit. You can also pay by check or money order.

If you paid no wages during a given quarter, you still must file contribution and wage reports indicating "No Payroll." You will be subject to a penalty if you fail to file. If you are closing a business and no longer expect to employ anyone, you should notify the Division so they can update your records.

Post a Notice (Poster)

You are required to post a notice (poster) regarding state unemployment claims in a prominent place in each business location. The poster contains information about workers' rights and duties under the West Virginia Unemployment Compensation Law. You can download a notice that meets all legal requirements (Form WVUC-B-59, Notice to Employees — Unemployment Benefits) from the Labor Law Posters section of the WorkForce West Virginia website.

Do Not Misclassify Employees as Independent Contractors

Employers who use independent contractors rather than hiring employees are not subject to the UC 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 UC 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 West Virginia UC taxes. Avoid possible penalties for making mistakes by checking both the IRS and WorkForce West Virginia websites for the latest information. WorkForce West Virginia also publishes an Employer Handbook in the Employers section of its website. In addition to state UC 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 on Nolo.

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