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Reemployment Tax for Employee Leasing Companies

A newly licensed Employee Leasing Company (ELC) has 30 days from the date of licensure by the Florida Department of Business and Professional Regulation (DBPR) to make an election with the Florida Department of Revenue to report and pay reemployment tax using the tax rate for each client. This is called the client method. The tax rate used will be based upon the wage and benefit history the client has earned under the ELC. If the client has no wage and benefit history under the ELC, the client will have the initial rate of .0270 (2.7%). A separate reemployment tax account number will be assigned by the Department under the Federal Employer Identification Number (FEIN) of the ELC for each client company.

This one-time election by an ELC is binding on all current and future clients. A newly licensed ELC that does not timely notify the Department in writing of its election to use the client method must report all leased and internal employees under its own reemployment tax account number and tax rate.

Registering and Electing the Client Method

An ELC that chooses the client method must first register with the Department and get a Reemployment Tax (RT) account number. Each client company must also have a separate RT account number. The fastest way to register is using the online application, which will guide you through an interactive interview.

Once the Department has issued an RT account number, the ELC can make the client method election online.

Reporting Client Companies' Information

Once the ELC has registered and elected the client method (whether online or by paper), the ELC will then be able to enter (key or import) each client company's information online. Remember, under the client method each client company must have a separate reemployment tax (RT) account number.

The import file specification must include:

  • ELC Information: DBPR License Number, Company Name, RT Account Number
  • Client Information: FEIN, RT Account Number, Legal Entity Name, Mailing Address, City, State, ZIP, Leasing Start Date.

Note: The fastest way for a client company to get an RT account number is to register online.

Employee information will only be required if the current ELC states that some or all of the client companies were previously reported by another ELC that had common ownership, management, or control with the current ELC at the time of the transfer.

File and Pay Tax

If an ELC chooses the client method, a tax rate will be calculated for each client company. The ELC must use the calculated rate to electronically file and pay a separate Employer's Quarterly Report (Form RT-6 PDF Icon) for each client company. An initial tax rate of .0270 (2.7%) will be assigned to client companies for whom the ELC has filed fewer than eight (8) chargeable quarters (generally it is 10 filing quarters), until an earned rate can be calculated. However, if the client company transferred from a related ELC, the mandatory transfer of experience provisions would apply according to Section 443.131(3)(g), Florida Statutes. The ELC will continue to file its own Employer's Quarterly Report (Form RT-6 PDF Icon) for its internal employees using the tax rate assigned.

Notifying the Department of Changes

An ELC must notify the Florida Department of Revenue within 30 days after the initiation or termination of the company's relationship with a client company. ELCs should use the online website to add client companies and the Client Company Change Form (Form RTS-11 PDF Icon) to terminate a client company.

ELCs who have chosen the client method should use the online website to both add and terminate client companies.

Frequently Asked Questions

Question: Is an Employee Leasing Company (ELC) and a Professional Employer Organization (PEO) the same type of entity?

Yes, the names ELC or PEO are often used interchangeably.

Question: If the ELC client already has a reemployment tax (RT) account number, does the client need to obtain a new RT number?

No.

Question: If the client does not have an RT number, must the client obtain one?

Yes, if the ELC is electing the client method, all clients must obtain their own RT account numbers if they do not already have one assigned. The client must register online or complete and submit a Florida Business Tax Application (Form DR-1 PDF Icon). The client should indicate the leasing arrangement in the application process.

Question: Will the state set up an RT account number for the client?

No. The client must register for an RT account number with the Florida Department of Revenue.

Question: The law requires that after the election to report and pay using the client method, the ELC must file and pay the Employer's Quarterly Report by approved electronic means. Will concessions be allowed if the ELC is in process but not yet able to report client level detail in electronic format?

No. Currently, any employer with 10 or more employees must report and pay electronically.

Question: The law says the client company shall continue to report the nonleased employees under its own rate. Does "nonleased employees" refer to employees not covered under the ELC arrangement?

Yes.

Question: If an employee leasing company chooses the new client method option, will all the clients under that leasing company move to that method, or do the leasing company's clients each have a choice about how leased employees will be reported?

The election applies to all the employee leasing company's current and future clients, for as long as the leasing company has a written agreement in effect with a client.