When you hire a new employee in Tennessee, there are several steps you need to take with both the State of Tennessee and the IRS.
Tennessee New Hire Reporting Requirements
When you hire a new employee, you can’t just start paying them and figure out the rest when you see your tax accountant in April. There are immediate new hire reporting requirements you need to meet.
The Tennessee new hire reporting requirements cover things like taxes and making sure both you and your employee are following the relevant laws.
Related: General guide to hiring employees including federal requirements.
Employment Authorization Verification
Most employers are required by law to make sure that new hires are authorized to work in the United States. This will usually mean collecting an I-9 form and appropriate identification from each new employee.
IRS Tax Withholding
You’ll also need to collect a Form W-4 from each employee. Form W-4 helps you figure out how much tax to withhold from each employee’s paycheck.
Employers don’t usually need to send a completed Form W-4 to the IRS, but you should keep each form in your records in case of any issues.
You will also need to send payroll tax deposits to the IRS as often as every other week depending on your payroll size. In addition, you’ll generally need to file a quarterly or annual payroll tax return.
Even though Tennessee doesn’t have a personal income tax on wages, employers still have to pay Tennessee payroll taxes in the form of unemployment insurance. State of Tennessee instructions are here.
Some seasonal employers and small farming operations may be exempt from having to pay unemployment taxes. Talk to your tax accountant for additional information.
You’ll also usually need to pay for worker’s compensation insurance.
Tennessee New Hire Reporting Program
Another important step you’ll need to take is reporting each new hire to the TN New Hire Reporting Program.
The TN New Hire Reporting Program is part of the Tennessee Department of Labor. It requires each employer to send information about employees to track things like child support payments and unemployment benefits.
Tennessee also forwards the data to the Federal Office of Child Support Enforcement to check for obligations in other states.
Every time you hire a new employee, you must submit a new hire reporting form within 20 calendar days of hire. If you don’t want to use the online form, you can also send a new hire form by fax.
The new hire form asks for information from your employee’s IRS W-4 Form such as his or her Social Security Number and Date of Birth. It also asks for the date of hire and basic details about your work location.
The new hire report lets the government monitor things like whether newly hired employees keep claiming unemployment when they shouldn’t. It also lets the state notify you if you’re supposed to withhold wages for child support or other liabilities.
What hires require a new hire reporting form?
State of Tennessee law requires employers to report all new hires. This includes employees working for you for the first time, former employees returning to work, and temporary employees.
Even if an employee left and returned, he or she may have been claiming unemployment or had other changes to their financial situation. The Department of Labor has no way of knowing if an employee returned to work within the TN new hire form.
That’s why you’re required to report both brand new and returning employees.
What employers are exempt from new hire reporting?
All employers must follow the Tennessee new hire reporting law. Unlike unemployment taxes and workers’ compensation, there are no exemptions for the new hire report.
What if I have employees working in multiple states?
Check the new hire requirements for each state you have employees in. You may have reporting requirements in multiple states.
Tennessee employers must report their employees to Tennessee or another state they do business in.
What if an employee leaves before I report them?
You must report all employees within 20 calendar days of the date of hire. Even if a newly hired employee left an hour into his or her first shift, you still have to report that employee.
What about employees working through agencies?
If an employee is on an employment agency’s payroll, the agency is the employer for the purposes of Tennessee new hire reporting requirements.
The agency usually only needs to submit the TN new hire form when the employee first works for the agency. The agency usually doesn’t need to report each new placement unless the employee has had a gap in work for the agency.
What is the penalty for not reporting new hires?
The normal penalty for not submitting the TN new hire form on time is $25 per employee per month.
If the Department of Labor believes you and your employee were intentionally trying to avoid the reporting requirements, you could be fined a minimum of $500.