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Reemployment tax is Florida’s name for unemployment tax, paid by employers on the first $7,000 of each worker’s wages and reported quarterly on Form RT-6. The Department of Revenue audits it on a separate track from sales tax, and most reemployment tax audits center on worker misclassification: treating someone as a 1099 independent contractor when Florida’s right-to-control test says they are a W-2 employee. A reclassification can mean back tax, penalties, and interest reaching back as far as five years.
Most Florida business owners brace for a sales tax audit and never think about the other one. Reemployment tax, the state’s unemployment tax, is run by the same Department of Revenue but audited on its own track, and it turns on a single high-stakes question: are the people you pay employees or independent contractors? Get that wrong, and a routine payroll review can become years of back tax. This article explains reemployment tax, how its audit works, and why misclassification drives nearly every assessment. For the sales-tax side, see our guide to what triggers a Florida sales tax audit. It sits alongside the rest of our Florida sales and use tax cluster, covering the payroll side that owners most often overlook.
What Reemployment Tax Is?
Reemployment tax is what Florida calls its unemployment tax. Employers pay it; workers do not, and it cannot be deducted from a paycheck. The money funds reemployment assistance benefits for eligible unemployed Floridians, and the Department of Revenue has administered it for the state since 2000.
The tax applies only to the first $7,000 of wages you pay each employee in a calendar year. Rates run from a low of 0.1% to a maximum of 5.4%, depending on your employment history, and you report and pay quarterly on Form RT-6, even in a quarter when no tax is due. Most employers become liable once they pay $1,500 in wages in a quarter or employ someone for any part of a day in 20 different weeks in a year, and they register through the same Florida Business Tax Application used for sales tax.
Reemployment Tax at a Glance
- It is Florida’s unemployment tax, paid only by employers.
- It applies to the first $7,000 of each employee’s wages per year.
- Rates run from 0.1% up to a maximum of 5.4%.
- It is reported quarterly on Form RT-6, even when no tax is due.
- The DOR audits it separately from sales tax, with a look-back of up to five years.
How a Reemployment Tax Audit Works
A reemployment tax audit is a payroll audit. The Department requests records that show who you paid and how you treated them: payroll ledgers, RT-6 reports, federal Forms 940 and 941, W-2s and 1099s, and any independent contractor agreements. The auditor’s purpose is to test whether the people you paid as contractors should have been on payroll as employees.
The look-back reaches up to five years, the period you are required to keep payroll records. If your records are missing or disorganized, the Department can reconstruct or estimate wages on its own, and it can strip your earned experience rate and apply the maximum 5.4% rate until you produce the documentation. For a larger employer, that rate jump alone can add thousands of dollars per quarter. You have the same right to representation here as in any Florida tax audit, and a representative can manage the records and the auditor’s questions on your behalf.
The Real Target: Worker Misclassification
Nearly every reemployment tax assessment comes back to one issue: a worker treated as an independent contractor who the state says is an employee. Florida applies a right-to-control test. If your business controls how, when, and where the work gets done, the worker is almost certainly an employee, no matter what a contract says.
This is the part that catches employers off guard: how you treat the worker decides the classification, not the paperwork. Issuing a Form 1099 does not make someone a contractor, and neither does a signed independent contractor agreement. Corporate officers who perform services count as employees too, even when they take no salary. When the Department questions a worker’s status, it asks both sides to complete an Independent Contractor Analysis (Form RTS-6061) and then issues a determination. A common pattern is a long-term worker paid weekly on a 1099 who works only for your business, uses your equipment, and follows your schedule; on a right-to-control review, that worker usually lands on the employee side of the line.
| Employee (W-2) | Independent contractor (1099) | |
| Control over the work | Employer directs how it is done | Worker controls their own methods |
| Measurement (what the DOR weighs) | Right to control the work | No right to control the methods |
| Tools and method | Set by the employer | Chosen by the worker |
| Reemployment tax | Employer owes it on wages | No reemployment tax due |
What a Reclassification Costs
When the Department reclassifies workers as employees, the employer owes reemployment tax on their wages, again on the first $7,000 each, for every open year, plus interest. Because the look-back can run five years, a handful of reclassified workers can turn into a sizable bill. The same wages can carry penalties on top of the tax and interest, which is why an assessment often lands well above what the unpaid tax alone would suggest.
Two sharper risks sit behind the tax. First, intentionally misclassifying an employee as a contractor is a felony under Florida law. Second, a state reclassification rarely stays contained: the same finding can expose you to federal consequences, including back income-tax withholding, both halves of FICA, and federal unemployment (FUTA) tax. One classification call can unwind years of payroll savings. If you are behind on RT-6 filings and have not been contacted yet, voluntary disclosure may let you come forward on better terms before an audit begins.
Common Misclassification Mistakes
- Relying on a signed contractor agreement to prove the classification.
- Treating a worker as a contractor simply because you issue a Form 1099.
- Leaving corporate officers off payroll when they perform services for the company.
- Assuming industry practice makes it correct, as in “everyone in my field uses contractors.”
- Controlling how, when, and where the work is done while still calling the worker a contractor.
- Keeping incomplete payroll records, which lets the Department estimate wages against you.
Questions Florida Employers Ask
Does a signed contractor agreement protect me? Not on its own. Florida looks at how the worker is actually treated, and the right to control the work outweighs any paperwork.
I pay them on a 1099, isn’t that enough? No. A 1099 reflects how you chose to report the payment; it does not decide whether the worker is legally a contractor.
Do I owe reemployment tax on my corporate officers? Usually yes, if they perform services for the corporation, even when they take little or no salary.
Why a Classification Review Is Worth It
The triggers and the test are knowable; applying them to your actual workforce, and defending the call if the Department challenges it, is where the risk lives. If you use contractors, the time to check is before an audit, not after. A Business CPA Tax Resolution Case Analysis reviews how your workers are classified and where your reemployment tax exposure stands, so you can fix problems on your own terms instead of the auditor’s.
For official guidance, the Florida Department of Revenue’s reemployment tax pages and its overview of what to expect from a reemployment tax audit explain the rules and the audit process, though neither replaces advice on your own workforce.
Worried About How Your Workers Are Classified?
A reemployment tax audit turns on whether your contractors should be employees, and the answer can reach back five years. Ed Parsons, CPA helps Florida employers review worker classification and resolve reemployment tax exposure before it becomes an assessment. Start with a Business CPA Tax Resolution Case Analysis, which explicitly covers payroll and audit exposure.
