I was working a fulltime job for a company that paid into the Massachusetts unemployment fund. Meanwhile, I was a franchisee of a commercial cleaning business. I had my cleaning business organized as a sole proprietorship. My spouse primarily did all of the work relevant to the cleaning business and I worked my full time job. My spouse did not draw a wage from the business. All of the profit was counted as my income. I was recently laid off from my full time job and was unable to collect because the income from the business which is in my name was too high. Subsequently, the cleaning business volume decreased signficantly and I reopened my claim to learn that I was eligible for a partial benefit. At this point, can I transfer ownership of the business to my spouse to achieve full eligibility in respect to my unemployment claim? :confused:

Hello kid:

Unemployment INSURANCE compensation is NOT based on your net worth. It's like your car insurance. If you made a claim on it, would they refuse to pay because you make too much money?? I don't think so. How much money you made or didn't make from yourself employment doesn't matter.

The fact that you may not be looking and available for full time work WOULD effect your claim...

So, in order to help you, I need some FACT.

excon

Hi Excon, thanks for taking the time to review my issue and help out. To clarify, based on the income from my former job the MA unemployment department determined an amount that I was eligible to receive due to being laid off. While unemployed and collecting benefits the state allows you to have income from self-employment so long as it does not exceed 30% of your benefit. Once you exceed that threshold, they reduce your benefit by $1 for every $1 you've gone over. So initially, the income from the business caused my eligibility amount to be $0 (based on the formula explained above). However, after the income from my business was reduced, I was then eligible for a portion of the benefit. The main issue/question is; is it OK to transfer ownership of the business to my spouse so that my income from the business will be reduced to $0? Therefore when the unemployment office applies the formula mentioned above, I'll be eligible for the full benefit. I don't want to break the rules or circumvent the system. But if it is legal and acceptable, then obviously it would be in my best interest to do it.

Hello again, kid:

Got it now.

It's an interesting proposition. What you DON'T want to do is transfer the business in such a manner that you could be accused of defrauding the employment department...

Yet, the way the income was calculated, DID result in your reduced benefit. It appears that your problem lies in your accounting, AND/OR the information you provided when you first made your claim... For income purposes, you're mixing apples and oranges. For sure, the income was split between your wife and yourself, yet it appears that it's being attributed solely to YOU for the purposes of calculating your benefit...

So, the income you've been telling them you get is wrong by half, at least. Plus, I suspect that if you did a proper accounting, you'll find that your portion of the income is even less than that.

Where did you get the numbers you reported on you UI application? I suspect they weren't from a CPA.

If I'm on the right track, you're going to need to have your business audited, and you're going to need to re apply using correct numbers. I don't know if you'll be eligible for BACK compensation, but wouldn't it be cool if you are?

Course, if I'm on the wrong track, let me know.

excon

Hi Excon, Again, thanks for continuing to help me out. Objective insight from an outsider always helps. But I should further clarify, this kids a chick. The business was in my name for tax purposes e.g. woman owned business. So we have an experienced accountant doing our taxes and ultimately determining the income from the business (after all the deductions he knows of). So the income was intentionally attributed 100% to me. If I sell to my husband - will it be OK? If I'm walking a fine line, then I would check with an attorney before making the transaction. But if my idea is totally absurd and surely illegal, then I might as well save the money. What do you think? Should I talk to a lawyer?

So the income was intentionally attributed 100% to me. Hello again, kid:

You're STILL mixing up your apples and oranges...

You can't sell a sole proprietorship to your spouse, because your spouse already owns half by virtue of being married to the owner. If you SELL it to him, you'll STILL own half, cause YOU'RE now married to the owner. Your tax returns should also reflect this reality. If they didn't, that is where you problem lies.

I'm having a hard time understanding your above statement... I don't know how the income got "attributed" to you. You either earned it, or you didn't. I maintain that you only earned HALF, even if ALL of it was "attributed" to you for some sort of tax break you got for your business being woman owned.

So, I want to know HOW the income was "attributed". Did you present tax returns to the bureau that determine's what a woman owned business is? Did you present tax returns to the unemployment people?

I tell you, I'm having trouble with the income being "attributed" to YOU, because for tax purposed the income was shared by your husband. I can't believe that a CPA would do that.

Or, are you trying to prove something to the state government differently than you tried to prove it to the federal government... Your difficulty may also lie in the fact that you are skewing your income for ONE purpose (woman owned business), which winds up screwing yourself for ANOTHER purpose, which is unemployment compensation.

It would be my guess, that whatever benefit you got from your business being minority owned, you gave back threefold to the unemployment people...

So, it would be MY advice to go back and FIX your returns or your financial statement to reflect reality, and take whatever benefit reality brings you. That means going back to the "women owned business" people and resubmitting your financial documents, and doing the same thing with the UI people...

In fact, it DOES occur to me, that by "attributing" income to you, when in reality, it's not YOURS, may indeed be a fraud upon those people... So, I'd go back to fix it, before THEY discover it.. Because, if they do, it may not be so fixable.

Of course, I could still be all wet.

excon