Selling a Business or Discontinuing Employment

This page contains information for entities which sell all or part of their business or stop employing workers for any reason. Select one of the categories below to go directly to your area of interest, or scroll down the page for the full text.

• Change in Ownership of a Business
• Successorship
• Prohibited Transfer
• End of Employment by the Entity
• Entity No Longer Meets Liability for Unemployment Tax

Change in Ownership of a Business

An employer should inform the Division of Employment Security immediately when a change in ownership of business occurs by completing the Report on Change of Business Operations. This form is printed on the reverse side of the Contribution and Wage Report instructions. The information may also be provided online through the Unemployment State Tax Automated Reporting (USTAR) system. Registered users may select the Employment or Ownership Change option under the Account Changes tab.

A business may change ownership due to a sale, lease, reorganization, merger, consolidation, foreclosure, inheritance or bankruptcy. A change of ownership may also occur when the business makes a change in legal entity such as when a partnership adds or changes a partner; an owner forms a corporation; or an entity changes its state of registration. The new owner or entity needs to complete the Report to Determine Liability Status form.

Successorship

When there is a change in the legal entity operating a business or the business is acquired and continued by another legal entity, a transfer of the employer's unemployment tax account may occur. This process is referred to as successorship.

The parties involved in a transfer are referred to as:

• Predecessor (previous operating entity) is the seller or prior operator whose organization, trade or business has been acquired by another entity.
• Successor (new operating entity) is the subsequent owner or operator that has acquired and continued the organization, trade or business of another entity.

An employer’s account is transferred to one or more successors who, at the same time, acquire and continue without interruption substantially all the business of a predecessor. In addition, effective January 1, 2006, if an employer transfers its trade or business, or a portion thereof, to another employer and at the time of the transfer there is substantially common ownership, management or control of the two employers, then the unemployment experience attributable to the transferred trade or business shall be transferred to the employer (successor) to whom such business is so transferred.

Substantially common ownership, management or control is defined in the Code of State Regulations, 8 CSR 10-4.190.

If the new operating entity is determined to be a successor:

The predecessor’s experience rating account, or percent attributable to the portion acquired, is transferred to the successor.

A successor who receives account experience from a predecessor shall stand in the position of the predecessor employer in all respects, including the predecessor's separate account, actual contribution and benefit experience, annual payrolls and liability for current or delinquent contributions, interest and penalties, and contribution rate.

In the event that any successor was an employer prior to an acquisition, the Division shall make a recalculation of the contribution rate for any successor employer on the date of the acquisition if the date of acquisition is on the first day of a calendar quarter; or on the first day of the next calendar quarter if the acquisition date is other than the first day of a calendar quarter. The successor employer shall use its rate (before recalculation) for the calendar quarter in which the acquisition was made when the date of acquisition is other than the first day of a calendar quarter.

If the Division determines the new operating entity is not a successor:

The predecessor entity keeps its entire experience rating account.  The new entity starts with a new employer account (unless it already had an account). The new owner is responsible for contributions and benefit charges on the wages earned by employees after the date of change. Contributions and benefit charges on any wages earned by employees prior to the date of change are the responsibility of the previous owner.

Prohibited Transfer

Effective January 1, 2006, the Employment Security Law was amended to prohibit the transfer of unemployment experience whenever any individual, type of organization or employing unit is not an employer at the time it acquires the trade or business of an employer and the Division finds that such new entity acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. Instead, the new entity will be assigned a new employer account and rate. To determine if the acquisition was made solely or primarily to obtain a lower rate, the Division will use objective factors such as:

• The cost of acquiring the business;
• Whether the new entity continued the business enterprise of the acquired business;
• How long such business enterprise was continued; or
• Whether a substantial number of new employees were hired for performance of duties unrelated to the business activity conducted prior to acquisition.

End of Employment by the Entity

An employer that ceases to have employment without a successor to its business may be exempted from filing reports beginning with the first day of the calendar quarter following the last date it paid any wages, provided it files an application for such exemption. The application must show the reason the employer discontinued having employment and that no employment is anticipated in the foreseeable future. A request for exemption from filing reports may be made by completing the Report On Change of Business Operations furnished with each Quarterly Contribution and Wage Report. The application may also be made online through the Unemployment State Tax Automated Reporting (USTAR) system. Registered USTAR users may select the Employment or Ownership Change option under the Account Changes tab.

An employer that is exempted from filing reports continues to be liable for reporting any wages it may later pay for employment subject to the Missouri Employment Security Law until or unless it terminates its liability. An employer must notify the Division if it resumes employment after being exempted from filing reports.

Entity No Longer Meets Liability for Unemployment Tax

An employer may file an application for Termination of Coverage as of January 1st of any calendar year. The application must be filed by February 10th of such year and must show that the employer and any predecessor combined had less employment and wages during the preceding calendar year than was necessary to become liable under the Law and was not liable for Federal Unemployment Tax. Criteria for terminating coverage as to wages and employment of the various types of employers during the preceding calendar year is as follows:

General Business Employer

Did not pay $1,500 or more total wages during any calendar quarter, had less than 20 weeks in which it employed a worker and was not liable for Federal Unemployment Tax;

Employer of Domestic Worker

Did not pay $1,000 or more cash wages during any calendar quarter and was not liable for Federal Unemployment Tax;

Agricultural Employer

Did not pay $20,000 or more cash wages during any calendar quarter, had less than 20 different weeks in which 10 or more workers were employed and was not liable for Federal Unemployment Tax;

Nonprofit Organization

501(c)(3)-exempt:  Did not employ four or more workers in 20 weeks;

Governmental Entity

Did not pay any wages.

The Division will mail an application at the end of the calendar year to any employer that requests termination of coverage during the calendar year.

In addition, any employer not having knowledge of liability for prior years may file an application to terminate coverage beginning any January 1st following first year of liability if the employer files such application within 90 days from the date of receiving a notice of liability, and employment or wages during any preceding calendar year met the criteria set out above.