UIIB 03-04 Attachment

SUMMARY OF NATIONAL TOTALS
Selected Data from State ETA 581 Reports
Quarter Ending June 30, 2003

**Subject Employers - Nationally**
Total Number of Contributory Employers Reported:	6,931,508 ¹
Total Number of Reimbursing Employers Reported:	98,750 ²
Total of all Liable and Active Employers Reported:	7,030,258

**Status Determination Promptness**
	Total Number of Determinations	Completed 90 Days or less %	Completed 180 Days or less %
New Employers	225,539	84.1%	91.0%
Successor Employers	35,096	75.5%	84.4%

**Employer Report Filing**
	% Filed Timely	% Secured	% Resolved
Contributory Employers	87.4%	91.7%	97.4%
Reimbursing Employers	87.7%	94.3%	96.4%

Receivables
Contributory & Reimbursable Combined
Beginning Balance	$608,462,119	New Receivables	$857,678,958
Amount Liquidated	$681,383,870	Declared Uncollectible	$20,344,727
Removed Due to Age	$61,230,084	Ending Balance	$703,182,396

**Audit Activity**
Audits Completed	29,400	Average Hours per Audit	6.9
Large Employer Audits	783	Average Quarters Audited	4.5
Change Audits	12,324	Audit Penetration – Qtr.	0.429%³

Total Wages Under Reported	$552,849,677	Contributions Under Reported	$7,381,399
Total Wages Over Reported	$162,930,898	Contributions Over Reported	$2,207,977
Gross Change	$715,780,575	Gross Change	$9,589,376

Number of employees found misclassified as independent contractors in audits:			29,007

¹ Due to a failure to report data, this total does not include approximately 5,000 contributing employers for the VI.
² Due to a failure to report data, this total does not include approximately 100 reimbursable employers for the VI.
³ Audit Percentage is based on the number contributing employers as of 9/30/2002 (6,852,994).

After declining slightly in the first quarter of 2003, the number of employers in the nation grew by 29,972 in the second quarter. As shown on Chart 1, the national total of all employers (contributing and reimbursing combined) grew from 7,000,286 in the first quarter of 2003 to 7,030,258 in the second quarter. Average quarterly growth for the twenty-two quarters since 1Q1998 has been 28,750 employers per quarter.

State performance in the 2Q2003 for New Status Determinations, as shown on Chart 2, again exceeded the 2003 GPRA objective of 80%. The percentage of reactivation determinations and new employer status determinations, which are made within 90 days of the end of the quarter in which the reactivation or initial liability occurred, improved significantly from 81.6% in the 1Q2003 to 84.1% in the 2Q2003. This is the highest national percentage on record for this function. However, the improved performance may be due it part to the decline in the volume of determinations. Chart 3 shows a steady decline in the number of second quarter determinations from 271,609 shown in the 2Q2000 to 225,539 shown in the 2Q2003.

The 1Q1995 was the first quarter in which data on the timeliness of determinations was collected. High and low performing states for this activity can be noted on Table 1 in the "% Within 90 Days" column.

Charts 2 and 3 together illustrate the relationship between improved timeliness of determinations and the volume of determinations. Note that the highest volume shown on Chart 3 was in the 2Q2000. Performance for that quarter was predictably low at 75.60%. Typically, the quarter ending March 31 produces the most determinations and the poorest performance for timely determinations in a calendar year.

As shown on Chart 4, the percentage of contributing employers filing timely first quarter tax reports, during the report period ending June 30, declined slightly from the previous three quarters. This decline is cyclical and may be partially due to a let-down by employers after struggling through voluminous year-end taxes and reports. Timely filing is usually highest during the report period ending March 31 when employers are filing their year–ending fourth quarter tax reports.

Please see Table 2, Filing Reports - Contributory Employers, for detailed state information.

Reimbursing employers tend to follow much the same reporting patterns as contributing employers. However, Chart 5 clearly shows an unusual bump for the March, 2003 quarter in the Reimbursing Employers, Resolved percentage. This happen in part due to an adjustment Rhode Island made in the number of state reimbursing accounts in their system. Many of their state reimbursing accounts were merged into one large account for the state.

The table below shows a breakdown of receivables by age for the quarter ending June 30, 2003, and compares the June quarter with the second quarter of the previous year and the immediately preceding quarter(Q/E 3/31/2003). The table below shows that, of the $703.2 million dollars that was delinquent on 6/30/2003, 46.9% of it was six months old or less. Chart 6 also shows graphically a comparison of how old the accounts receivable were for each of the previous four quarters.

Quarter Ending	Amount	<=6 months	7-9 months	10-12 months	13-15 months	> 15 months
Q/E 6/30/2003	$703.2 M	46.9%	9.2%	10.1%	15.0%	18.8%
Q/E 6/30/2002	$698.7 M	44.1%	9.0%	11.0%	15.1%	20.8%
Q/E 3/31/2003	$608.5 M	32.0%	12.8%	18.6%	12.9%	23.7%

The number of audits competed for the quarter was 29,400; the most since the quarter ending June 30, 2000. Auditors discovered 29,007 employees that were misclassified as independent contractors (ICs) during the quarter. Chart 7 shows that the number of independent contractors has actually exceeded the number of audits in only two quarters. Although more misclassifications were found in CY 2002 (114,987) than in 2001 (95,650), the trend for the first and second quarters of 2003 is downward. Five states (DC, VA, KY, IN and MN) reported "0" for the number of employees that were misclassified as independent contractors either because they completed no audits or they have been unable to program their audit and tax systems to count the misclassified ICs. The VI failed to file an ETA 581 Report. As these non-reporting states come on line and begin reporting data, the yearly count of misclassified ICs will probably continue to increase.

Chart 1 - Employer Growth QE 03/31/2003
Chart 2 - Filing Employer Contribution Reports
Chart 3 – Number of New Employer Determinations
Chart 4 – Contributing Employers Report Filing – Timely, Secured & Resolved
Chart 5 – Reimbursing Employers Report Filing – Timely, Secured & Resolved
Chart 6 – Age of Receivables, Last Four Quarters
Chart 7 – Audit Results, Employees Misclassified Compared to Audits Completed

Table 1 - Status Determination Promptness
Table 2 - Filing Reports - Contributory Employers
Table 3 - Filing Reports - Reimbursing Employers
Table 4 - Collection Activities
Table 5 - Percent Distribution of Age of Receivables
Table 6 - Audit Activity
Table 7 - Audit Change in Total Wages and Contributions