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F I S C A L I M P A C T R E P O R T

SPONSOR Silva

DATE TYPED 2/12/2005 HB 426/aHLHRC

SHORT TITLE Late Wager Report and Tax Filing Penalties

SB

ANALYST Dunbar

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

$ 345.0

$ 345.0 Recurring

Penalty and

Interest Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Labor (DOL)

SUMMARY

Synopsis of HLHRC Amendment

House Labor and Human Resources Committee Amendment to House Bill 426 allows for other

programs in DOL to use unemployment compensation penalty and interest funds which were

collected for late filing of wage reports and late payment of taxes. The previous language di-

rected these funds for the administration of the unemployment insurance program. In FY04 the

LFC recommended modifying the statute to allow the Labor and Industrial and Human Rights

divisions the use of the penalty and interest fund.

House Bill 426/aHLHRC -- Page 2

Synopsis of Original Bill

House Bill 426 increases the penalty for late filing of a quarterly unemployment compensation

report from $50 to $75. Additionally, the bill increases the rate of interest on late payment of

unemployment compensation contributions to 1.5 percent, up from 1 percent. Money in the fund

may be spent only for administration of the unemployment insurance program.

This bill is the result of the Governor’s performance review recommendations.

Significant Issues

According to DOL the implementation of this bill may cause employers to submit their contribu-

tion reports and unemployment tax timely, reducing administrative burden on the Department via

collection efforts.

FISCAL IMPLICATIONS

It is estimated that the changes will generate an additional $345,000 annually in the Depart-

ment’s penalty and interest fund.

ADMINISTRATIVE IMPLICATIONS

The increase of penalties and interest will ease the workload of the administrators due to the fact

that New Mexico employers may submit their contribution report and tax timely.

WB/sb:lg:yr