A sign at the headquarters for Washington state’s Employment Security Department at the Capitol in Olympia, Wash. (AP Photo/Ted S. Warren, File)
A Snohomish small business says it got hit with a 1,000% increase in unemployment tax — only to discover it was a mistake on the Employment Security Department’s part.
Asbestos-Test, Inc., which only has six employees, got a bill after an audit by ESD that they owed more than $11,000 in unemployment tax — a jump of ten times last year’s bill.
“Their tax rate for 2021 goes to 2.63%. Our accountant was like, ‘That can’t be right — to go from 0.23% to 2.63%,’” said Chris Patterson, whose family owns the business.
Unemployment insurance taxes are paid by the business owner based on the number of people employed and they go up if a business lays off an employee. This year, many businesses have seen skyrocketing unemployment taxes to refill the Unemployment Trust Fund after a year of record unemployment — and those businesses that had to lay off the most people last year have seen the biggest jumps.
However, Patterson said they only employ six people and have not laid anyone off during the pandemic — so he knew something was off. He filed an appeal and let ESD know of his concerns, but he said the department continued to go forward with trying to collect payments.
The family decided to hire an attorney — and that’s when things changed with ESD, Patterson said.
“All of a sudden it was like, ‘Oh yeah, we’ll be looking into this and getting back,’” he said. “And then before too long, they said, ‘Yeah, yeah, sorry, that was a mistake on our part. This is your updated account.’”
Emails obtained by KIRO Radio that were sent from ESD employees to Patterson’s attorney, Littler Mendelson P.C., said that they believed “a mistake was done by the accounting department” and would be “recalculating the taxes.” Soon, Patterson said, the department told him an error had indeed been made and waived the charge.
Patterson is grateful they are no longer looking at such a large bill, but he is frustrated at what it took to get to that point.
“We had to get an attorney involved for them to admit that they made a mistake,” he said. “How many other businesses are being raked over the coals because they haven’t lawyered up?”
The mistake caused a lot of heartache at a time when Patterson’s family already has quite a bit of stress on their plate — his dad is battling stage-4 colon cancer. Patterson said he felt like they weren’t treated with any compassion or humanity.
“It’s a gut punch,” he said. “And then to turn around and say, ‘Oh yeah, sorry, it’s a mistake.’ And for us to have to lawyer up for them to admit that — really? Life is already hard enough.”
ESD told KIRO Radio it could not comment on individual situations like this, but did note that there can be many reasons why a business gets a higher-than-accurate tax bill, including after audits like the one Asbestos-Test had.
“Timing can play a role in updates to employers’ billing statements after an audit,” the statement read. “If we add credits or charges — or waive charges — after billing statements are batched printed and batched for mailing, the billing statement may not reflect this change.”