Tesla Resolves $655,000 Clerical Error With State Of Nevada

As the state of Nevada heads to court to collect a reported unpaid bill, Tesla quickly resolves the issue.

According to Bloomberg, a Tesla spokesperson explained that after Tesla integrated SolarCity employees, the company began conversations with the state of Nevada pertaining to newly required contributions to unemployment insurance. Apparently, the automaker’s financial responsibility increased, but its recent quarterly contributions didn’t reflect the change.

Nevada officials headed to court to collect some $655,000 in unemployment tax monies, which were reportedly unpaid by the Silicon Valley company. Just one day later, Tesla resolved the situation.

An official document related to the state’s filing shows that Tesla’s unemployment tax payment was short at the end of the first and second quarters of 2018. The document shows that Tesla had $68 million in taxable wages for Q1 and $55 million in Q2. However, the amount that was paid didn’t add up to what was expected based on the new responsibility for the additional employees.

The Tesla spokesperson made it clear that this situation occurred due to a clerical error and that the company immediately initiated payment to account for the shortage.

Nevada Department of Employment, Training and Rehabilitation spokeswoman Rosa Mendez also confirmed that the state reached out to Tesla and the error was being taken care of.

Source: Bloomberg

This article originally appeared on Inside EVs.

 

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When I first read the story that Nevada had instituted collection proceedings against Tesla for unpaid UI, it did not make any sense to me. Tesla has plenty of money, so there would have been no financial burden on the company. I suspected that Tesla screwed up somehow with the application of the special UI credits that the state offered as an inducement to build the Gigafactory outside Sparks.

So, there was a clerical error. That comes as no surprise. If other departments can mess up with manufacturing, delivery, quality control, and communication, there is no reason not to expect errors within the accounting and compliance departments. At least Tesla filed the quarterly contribution tax returns; unfortunate that no one bothered to drill down into the figures and validate the amounts on the returns. There is absolutely no excuse for someone of high rank within the accounting department not to review the payroll tax returns, whether prepared in house or by a payroll service like ADP.

I checked with the State of Nevada's UI website. For 2018, Nevada assesses UI on the first $30,500 of each employee's annual earnings in that state. New employers make contributions at .0295, while employers with excessive UI claims from terminated employees can pay as much as .054. Employers with few claims and large contributions accumulate a large reserve account, and can be taxed at a rate less than 1%.

I would guess that Tesla calculates UI at the highest rate (.054) since they make zero contributions but could easily have claims from separated employees. So, $655,000/.054 = $12,129,629 in taxable wages that were subject to tax that was not remitted. (There might be some P&I included in the $655,000, so the wage base is likely lower.)

In any event, there appear to be >3,000 employees employed by Tesla in the Silver State.