| Filed by | The buyer reports the acquisition; the seller reports the sale or closing of its account |
|---|---|
| Agency | Florida Department of Revenue, which collects reemployment tax from employers |
| Timing | The buyer has 90 days from the acquisition to report; the seller should update its account promptly |
Watch for: Ask the buyer's attorney whether the purchase counts as a succession, since that decides whose rate applies.
What Reemployment Tax Is
Florida employers pay a state tax that funds unemployment benefits. It is reported on a quarterly return, and each employer has a tax rate that depends partly on its history of former employees drawing benefits.
That history is called experience. When a business is sold, the question is whether the experience follows the business to the buyer.
When a Succession Happens
Under Florida rules, a succession starts when all or part of a business is transferred from one employer to another.
The state looks at facts such as how much of the business was acquired and how much time passed between the old owner stopping and the new owner starting.
When an acquisition is a succession, the experience of the old business can pass to the new owner. That helps the buyer if the history is good and hurts if it is not.
The Buyer's Form
A buyer who acquires a business, in whole or in part, files form RTS-1S, the Report to Determine Succession and Application for Transfer of Experience Rating Records, within 90 days.
If the buyer misses the window, a request to transfer the records can be denied.
If the two businesses share ownership, management or control, the rules differ. The experience must transfer, and written notice may be enough, though the Department recommends the form.
The Seller's Side
The seller should report the sale and update or close its own account. Florida has an employer account change form, RTS-3, for moving, selling, closing or changing the business. The Department's website shows the current way to file it.
File the last quarterly return for the period in which your employees were on your payroll, even if the sale happened mid quarter.
Why It Matters in the Price
A buyer will ask what rate the business pays. If your experience is poor, the buyer may price that in, or ask to avoid the transfer. If it is good, mention it, since it saves the buyer money.
Florida also has a penalty for transfers made to get a lower rate, so do not structure a sale to shift experience. Your attorney will warn you off anything that looks like that.
Employees After Closing
If the buyer rehires your staff, nothing in this process changes their wages. What changes is whose payroll they are on and whose tax account is billed. Make sure final pay, accrued vacation and benefits are handled the way the contract says.
- Final paychecks on the dates required for your payroll
- Final quarterly return and the final account update
- Tax forms for employees, issued on time
- Copies of payroll records kept with your sale documents
Partial Purchases
If a buyer takes only one location or line, the experience may be split. The Department has a process for that, and the facts matter. Keep records showing which employees worked in which part.
What Else Follows
Sales tax and property tax work run alongside this. See closing your Florida sales tax account after a business sale and Florida tangible personal property return in the year you sell.
Care businesses with large payrolls, such as selling an assisted living facility, should plan for this early.
Questions to Ask Before Closing
- What reemployment tax rate does the business pay today?
- Are all quarterly returns filed, and all tax paid?
- Will the buyer keep most of the staff, or only some?
- Who files which form, and by which date?
Put the answers in the purchase agreement. A short clause now is easier than a letter from the state later.
A Note on Contractors
If some of your workers were treated as independent contractors, expect questions. The state decides who is an employee by the facts, not the label on the paperwork. Your CPA or attorney should review it before a buyer's team does.
Keep Copies
Keep copies of every form and letter with your sale papers. Notices from the state can arrive months after closing, and a file ready to answer them saves time.
Sources and a Caution
This page draws on the Florida Department of Revenue's reemployment tax pages and forms and the state's administrative rules on succession. It is general information, not tax or legal advice. Confirm the details with your CPA or attorney.
Questions about how a sale would work for your payroll? Call (305) 555-0147 or send the form.