The New York State Unemployment Insurance Appeal Board (UIAB) recently clarified its treatment of Limited Liability Companies (LLCs) electing an S-Corporation (S-Corp) tax status, indicating that members of an S-Corp LLC may be treated as employees, and therefore, may be required to report earnings and make unemployment insurance contributions. 

Historically, LLC members were generally considered self-employed, and their earnings typically treated as non-reportable for unemployment insurance purposes. This changes for S-Corp LLCs, but by contrast, LLCs that have not elected S-Corp status will generally continue to be treated as self-employed and not subject to unemployment insurance contributions. 

Act Now 

New York LLCs that have previously not reported compensation to members should review their reporting practices and confirm compliance in light of these decisions. Contact our tax pros in Fredonia and Rochester for assistance.