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Revenue Quality Control measures and unemployment tax reporting
Summary ETA explained the measures states would use to assess unemployment tax operations, including employer status determinations, overdue reports, collections and field audits. Its attachments described how to interpret each measure, which Form ETA 581 fields changed and how staff could verify the underlying data. The archived letter prints a 1995 expiration date; its present status is unconfirmed.
Document
Federal guidance
Agency
U.S. Department of Labor, Employment and Training Administration (ETA)
Document number
UIPL No. 42-94
Date issued
August 16, 1994
Status
Archived by the agency
The archived letter prints an August 31, 1995 expiration date; no current cancellation or replacement is confirmed.
Status last verified October 26, 2026
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About this page: The full text below is the official document from U.S. Department of Labor, Employment and Training Administration (ETA). Ezel adds the plain-English summary and tracks the document's status. The official source linked on this page is authoritative for any reliance.
U.S. Department of Labor
Employment and Training Administration
Washington, D.C. 20210
Classification: UIS
Correspondence symbol: TEUQR
Issue date: August 16, 1994
Rescissions: None
Expiration date: August 31, 1995
Directive: UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 42-94 To: ALL STATE EMPLOYMENT SECURITY AGENCIES From: MARY ANN WYRSCH, Director, Unemployment Insurance Service Subject: Revenue Quality Control (RQC) - Rationale for Computed Measures and Changes to Form ETA 581, Contribution Operations Which Impact Measures
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Purpose. To provide State Employment Security Agency (SESA) staff with information to assist in reviewing and analyzing RQC Computed Measures and to indicate where revisions were made to the ETA 581 Report to accommodate these measures.
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References. UIPL 42-93 (August 31, 1993), UIPL 32-94 (June 24, 1994)
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Background. During the summer of 1993 comprehensive training was offered on the RQC design and methodology. This training was attended by both RQC reviewers and Data Processing (DP) staff from fifty-two (52) SESAs (all but the Virgin Islands). At training, information was provided on the twenty-one (21) measures used to assess timeliness and completion in four of the functions under review (Status Determination, Report Delinquency, Collections and Field Audit). It was explained that data elements used to calculate the measures came, for the most part, from the ETA 581 report. Following training, all SESAs began voluntary implementation of the program.
The ETA 581 report has been revised to accommodate planned changes in data elements for accounts receivable and to include the proper elements for the RQC measures. SESA staff raised additional questions concerning these changes to the ETA 581 report. With the release of UI Program Letter 32-94, which announced the implementation of a revised ETA 581 and institution of RQC Computed Measures effective with the first calendar quarter of 1995, it is essential that all SESAs understand the measures and report data correctly.
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Clarification of Measures and Data Element Changes. Three attachments are provided with this directive. The first, Attachment #1, lists each of the RQC measures and provides rationale and information regarding their use. The second, Attachment #2, lists the changes made to the ETA 581 Report which were made to provide the data for RQC measures. The third, Attachment #3, lists tips and hints in finding and verifying data for Computed Measures. State staff in RQC, DP and preparation of required Federal reports may find this information helpful.
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Action Required. SESA Administrators are requested to provide the attachments to the RQC reviewers, tax staff, DP staff and staff responsible for Federally Required Reports.
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Inquiries. Direct inquiries to your Regional Office.
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Attachments.
Attachment #1 — Official PDF: https://oui.doleta.gov/dmstree/uipl/uipl94/uipl_4294a1.pdf
UIPL 42-94 Attachment #1
REVENUE QUALITY CONTROL
Computed Measures Rationale and Usage
Status Determinations
There are four (4) Computed Measures in the Status function.
1) Percent of new determinations made within 90 days
This indicator reflects the percent of status determinations made during the 90
day time period following the ending date of the quarter in which a new business
becomes liable. It is intended to provide a measure of the effectiveness of the
methods used by the SESA to identify and register liable employers in a timely
manner. The end of the quarter date is used in this indicator to promote
consistency in measuring timelapse by assuring that all SESAs count from the
same date.
The ninety (90) day timeliness indicator is governed by the need to have
employer wage records secured in the SESA files for timely benefit payments.
Also, undue delay in setting up an account can result in a loss of revenue.
Good customer service is provided if employers are promptly assigned their
account number and notified of their status.
2) Percent of new determinations made within 180 days
This indicator reflects the percent of status determinations made during the 180
day time period following the ending date of the quarter in which a new business
becomes liable. The 180 day timeliness indicator is governed by the need for
additional time and incentive to make determinations which have passed the due
date for the 90 day indicator. This indicator encourages SESAs to use all
available methods to identify and register those employers whose registration
could not be completed within the 90 day period.
The number of determinations made within 180 days includes the count made
within the 90 day period so the percentage at 180 days will always be equal to or
greater than the percentage at 90 days. SESAs should consider it desirable if,
over a period of time, the percentage of determinations made in 90 days grows.
The ultimate goal is to complete as many accurate determinations as possible
within the 90 day time period. SESAs should be making efforts to decrease the
number of determinations made during the 90-180 day time frame and move
them into the 90 day timelapse period. These two measures allow this kind of
analysis. Information from the Status Methods Survey can serve as a
management tool in this endeavor. A review of tools and methods used to find
and identify liable employers should be conducted to determine if all possible
resources are being used.
3) Percent of successor determinations made within 90 days
(same as Indicator #1--count from the end of the quarter date in which the
business became liable as a successor)
4) Percent of successor determinations made within 180 days
(same as Indicator #2--count from the end of the quarter date in which the
business became liable as a successor)
Successor determinations include:
- the merger of two existing accounts
- partial and complete successors (with or without transfer of
experience)
- newly liable as well as existing accounts.
The separate focus on successor determinations recognizes the
significant added complexity and investigative time inherent in these
transactions. Delays in the identifying and processing these
ownership changes result in added workload to correct existing files
and reports. By tracking these determinations, SESAs are alerted to
the possible need to redirect resources or revise procedures to
promptly establish successors.
The numerators used in all four measures are NEW elements from the revised ETA
581 Report, because the timelapse is measured from the end of the quarter NOT the
date the employer liability occurred. The denominator for the successor measures
(measures # 3 & #4) is a NEW element from the revised ETA 581 Report.
Report Delinquency
There are six (6) Computed Measures in the Report Delinquency function. These indicators
provide information on how effective the SESA is in obtaining reports timely and in securing
and resolving delinquent reports. The six indicators are:
1) Percent of reports filed timely (contributory employers)
This indicator reflects the percent of voluntary compliance. It is intended to
provide a measure of SESA efforts to promote voluntary filing through effective
publications/forms, educational programs and/or utilization of enforcement
tools. Analyzing this indicator in conjunction with the Methods Survey, will
enable the RQC Reviewer to identify factors which encourage voluntary
employer reporting compliance.
Reports are considered timely if received by the SESA's due date which, for this
measure, is defined as the date after which the SESA can impose penalty and/or
interest, which ever comes first.
An increasing percentage is the goal for this measure.
2) Percent of reports secured by the end of the following quarter
(contributory employers)
This indicator measures the percent of employer compliance by the level of
secured reports for the preceding quarter. The "secured" definition combines
voluntary employer reporting and SESA influenced reporting. It excludes report
delinquencies which are resolved by final assessment of estimated wages and
employers ruled non-liable for the quarter, thereby maintaining emphasis on
employer compliance and on the effect of SESA efforts to secure delinquent
reports. When analyzed with indicator #1 (above), it should be possible to
determine the effectiveness of SESA reporting enforcement efforts.
The count of reports secured includes those received timely in the same ETA
581 report quarter.
This will provide management with information on how complete the processing
has been for reports due in a given quarter BEFORE reports begin arriving for
the next quarter. It promotes prompt processing of secured reports since the
report must be posted by the end of the quarter to be counted as secured.
When these measures are analyzed along with data collected in the Methods
Survey, RQC may be able to identify tools which the highest performing SESAs
may have in common. This information can then be shared with all SESAs as
part of RQC's role in providing technical assistance.
An increasingly higher percentage indicates the SESA has improved employer
compliance.
3) Percent of reports secured plus delinquencies resolved within 180
days (contributory employers)
To effectively manage accounts receivable it is important that amounts
determined to be due are established on a timely basis. This indicator is
intended to bridge the gap between Report Delinquency and Collections, and in
effect is an indicator of "tax report delinquency" resolved via establishing a
legally due and collectable amount due. Considering that for most SESAs
reports are delinquent if not filed within 30 days after the quarter ending date,
and adding an additional 150 days , 180 days (i.e., two quarters) was selected as
a reasonable goal for resolution of report delinquencies.
Measures number One and Two are used to check on employer compliance
while this measure is to check on report delinquency follow-up. By allowing
two quarters to pass, time is provided for SESAs to invoke the necessary follow-
up actions of issuing assessments and investigating and determining non-liable
employers.
The inclusion in this measure of final assessments by estimation of wages and of
non-liability determinations for the quarter encourage SESAs to act promptly to
determine potential accounts receivable. This not only tends to preserve a
SESA's legal priority to employer assets, it also becomes a method to gain
employer compliance in submitting actual wage information.
The goal of this measure is to reach as close to 100% as is possible.
Similar report delinquency measures have been developed for reimbursing
employers. They are not combined with contributory employers because report
timing, delinquency processing etc. are often different. Having the two types allows
separate analysis of the methods and procedures used.
4) Percent of reports filed timely (reimbursing employers)
(same as indicator # 1)
5) Percent of reports secured by the end of the following quarter
(reimbursing employers)
(same as indicator # 2)
6) Percent of reports secured plus delinquencies resolved within 180
days (reimbursing employers)
(same as indicator # 3)
The numerators used in all six measures are NEW elements from the revised ETA 581
Report.
Collections
There are eight (8) Computed Measures in the Collections function.
1. Amounts (Percent) paid timely (contributory employers)
This indicator measures the extent of employer voluntary payment compliance.
It is intended to provide a measure of SESA efforts to promote payment
compliance through effective publications/forms, educational programs and/or
utilization of enforcement tools. It also reflects the relative magnitude of
noncompliance, and how much dollar risk is involved.
Improvement for this measure would be indicated by an increasingly larger
percentage.
2. Turnover of accounts receivable (contributory employers)
This indicator reflects the extent of accounts receivable workload, and indicates
the rate that accounts receivable are worked in relation to tax due. If the rate is
high relative to other States, or increases over time, it will demonstrate the
SESA's efforts in managing receivables.
A higher percentage is desirable since it indicates that the SESA is removing
receivables from the files either by liquidating them, declaring them
uncollectible or moving them to the "doubtful account".
3. Percent of receivables declared uncollectible or removed to "doubtful
account" (contributory employers)
This indicator represents one component of the Turnover Ratio. While a low
percentage of amounts declared uncollectible or doubtful is desirable, an
increasing percentage in this measure may also be an important indicator of
SESA efforts to perfect accounts receivable inventories and write-off amounts
for which no further collection actions are anticipated.
Analysis of this indicator, compared to the turnover ratio, will reveal if the
receivables being cleared are mostly those ruled uncollectible or doubtful. It can
also indicate if receivables are being removed or written-off too soon.
A steady or declining percentage here combined with an increase in the
Turnover Ratio (Measure # 2) pinpoints improved collection results.
4) Percent of accounts receivable (contributory employers)
This indicator provides a measure of overall compliance effectiveness. To
equitably assess the effectiveness of SESA compliance and collection efforts, a
comprehensive measure will contain the amount of past due dollars as they
relate to the total amount due. Long term trends due to the rise and fall in
employment, wage base, and tax rates all impact the size of accounts receivable.
While the fluctuations of total amounts due may be outside the SESA's control,
the SESA is responsible for collecting the portion of dollars which become past
due. This measure will indicate the true significance of a SESA's accounts
receivable by showing what proportion of tax is past due. Also, the rise and fall
of past due amounts can be better understood when reviewed in relation to the
rise and fall of total dollars due.
The goal is to maintain a percentage as low as possible. As Measure # 1,
amounts paid timely, increases this measure should decline.
Analysis can be done using the Methods Survey to insure all possible tools are
being used to reduce receivables. In addition, a review of new or better tools can
be made in order to lower this percentage. RQC will attempt to identify the
tools used in common by those SESAs maintaining a low percentage. This
information can then be shared with all SESAs as part of RQC's role in
providing technical assistance.
Similar collections measures have been developed for reimbursing employers. They
are not combined with contributory employers because collection tools, collection
processing etc. are often different. Having the two types allows separate analysis of
the methods and procedures used.
5. Amounts (Percent) paid timely (reimbursing employers)
(Same as Indicator # 1)
6. Turnover of accounts receivable (reimbursing employers)
(Same as Indicator # 2)
7. Percent of receivables declared uncollectible or removed to doubtful
account (reimbursing employers)
(Same as Indicator # 3)
8. Percent of accounts receivable (reimbursing employers)
(Same as Indicator # 4)
The numerator in indicators # 2, 3, 6 & 7 includes a NEW element added from the
revised ETA 581 Report (receivables removed at end of quarter or doubtful
receivables).
Field Audit
There are three (3) Computed Measures in the Field Audit function. These indicators provide
information which can be used for analysis of improper employer reporting and audit penetration
by both number and size of employer. The three indicators are:
1) Percent of change in total wages resulting from audit
This measure can be analyzed to determine to a degree the level of employer
compliance and understanding of proper reporting requirements. Total wages
are used in lieu of taxable wages or contributions to maintain a level playing
field between States. Both taxable wages and contributions fluctuate by
individual State law and varying tax rates.
In an ideal world this measure would indicate zero change revealing full
compliance and complete understanding of reporting requirements by
employers.
Another use of this measure would be an indication of auditor performance. Are
"new" auditors finding changes? Are they performing quality audits? How do
they compare to "veteran" auditors?
A common use for an indicator like this is in targeting employers for audit. Are
there particular types of employers who, from past audit results, would be more
likely to have changes in figures originally reported? This also acts as a gauge
of the effectiveness of the SESA's employer education program.
Annual averages are used to account for seasonal or other fluctuations.
2) Percent of contributory employers audited
This measure is intended to provide information on SESA audit production. Of
all the employers available to be audited, how many were audited in a given
calendar year?
An increased percentage is desirable for this measure.
3) Percent of total wages audited (annualized)
This measure is similar to measures #2 (above) except that it gives an indication
of the size of employers audited. Of all the wages available to be audited, how
much was audited in a given calendar year?
An increasing percentage indicates the audits have examined a larger portion of
the total wages paid in the State. This is an indication of size of employers
audited. If the same number of audits are conducted from year to year a larger
numerator means more wages have been audited and therefore the employers
being audited have larger payrolls. Increased percentage is the goal of this
measure.
The denominator of indicator # 1 includes a NEW element (total wages audited - pre-
audit) from the revised ETA 581 Report. The numerator of indicator # 3 includes a
NEW element (total wages audited - post-audit) from the revised ETA 581 Report.
Attachment #2 — Official PDF: https://oui.doleta.gov/dmstree/uipl/uipl94/uipl_4294a2.pdf
UIP: 42-94 Attachment #2
Revisions to
Form ETA 581, Contribution Operations
to accommodate RQC Computed Measures
(Note: Item numbers listed are from a draft version of the revised ETA 581)
Items 1, 2 & 3 - Count of Employers
These counts are no longer determined by using the number of Status
Determinations made. SESAs must do a computer count of active employers (or
other reliable method) at the end of the quarter.
This change is necessary since the Successor Determination count (see item #
17) includes more than just determinations establishing new accounts. In
addition, many SESAs were not counting properly using the "old" method.
These items are important for their current use as the workload count for tax
funding.
Items 6 through 11 - Filing Reports for Preceding Quarters
All of these items are NEW to provide data for evaluating SESA effectiveness in
managing delinquent reports. Timely, secured and resolved are each used for
individual measures in RQC. Timely is defined as being received by the date
after which penalty and interest can be imposed.
Example, using the report quarter ending June 30, 1994:
Timely - Enter in item 6 (or, for reimbursing, item 9), the number of employers
who, as of the "Due Date", had submitted reports for the quarter ending March
31, 1994.
Secured - Enter in item 7 (or, for reimbursing, item 10), the number of
employers who, as of June 30, 1994 had submitted reports for the quarter ending
March 31, 1994. This means "report in hand" which excludes assessments
against contributory employers and all employers ruled non-liable. The secured
count includes those received timely.
Resolved - Enter in item 8 (or, for reimbursing, item 11), the number of
employers who, as of June 30, 1994, had resolved reports for the quarter ending
December 31, 1993. This includes assessments against contributory employers
and determinations of non-liability. The resolved count includes those secured
for the December quarter.
Items 15, 16, 18 & 19 - Status Determinations, Time Lapse
All of these items are NEW to provide data for RQC Status Determination
Computed Measures. The time lapse is now calculated from the end of the
quarter in which the business became liable to the date of determination. Date
of determination is defined as the date entered into the system.
There are counts at both 90 and 180 days.
Item 17 - Number of Successor Determinations
This item now includes ALL successor determinations not just those establishing
a new account. This item is NEW to provide data for RQC Successor Status
Determination Computed Measures.
Items 25 & 37 - Receivables Removed at End of Report Quarter
These two items are NEW and will be used along with items 24 & 36
(Receivables Declared Uncollectible) in Revised Collections Measures - "
Percent of Tax Due Declared Uncollectible or Doubtful". Items 25 and 37
include receivables which have previously been reported (for the two
immediately preceding 581 reports) in items 32 (over 15 months) & 44 (over 15
months). RQC will define these receivables as "doubtful".
Item 48 - Total Wages Audited - Pre-Audit
Item 49 - Total Wages Audited - Post-Audit
These items are NEW to provide data for RQC Field Audit Computed Measures.
There was considerable confusion because on the "old 581" report some SESAs
were reporting "pre-audit" wages and some reporting "post-audit" wages. Both
items are now on the revised ETA 581 Report.
Attachment #3 — Official PDF: https://oui.doleta.gov/dmstree/uipl/uipl94/uipl_4294a3.pdf
UIPL 42-94 Attachment # 3
Hints - Tips - Traps
in Reviewing Data Elements
and Obtaining Accurate Counts
M The Verification Section, Appendix B, RQC Operations Handbook is a good
guide in the process to validate the SESA's accuracy of Computed Measures data
elements.
M Compare State definitions to the Federal definitions and identify any conflicts.
M State processes may not be documented meaning the only way to verify data is
to observe process and document methods used.
M Collecting copies of manuals, instructional guides, data processing reports, data
processing work requests, etc. will be invaluable in verifying data and its
sources.
M Since the data needed may be maintained in one or more locations or systems,
reviewing the general logic of manual processes and PC applications may be
necessary and as essential as reviewing logic in main frame processing
programs.
M Tracing the path of the data element back to the original source may be
obscured. Often the data used in the 581 report is from an internal management
report. Specific data elements may be "buried" in a data processing run and
produced as a literal by-product. Line staff members producing the information
are often unaware of the need for counting and defining data correctly and its
use in a Federally required report.
M Be sure to allow sufficient time for working with data processing staff to verify
data.
M States could possibly use the Acceptance Sample universes from Status and
Field Audit for the Computed Measures by adding a few additional data
elements to the record when building those universes.
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