The UIA 1027 Notice You Owe the Buyer Before Closing

What This Form Is

Form UIA 1027 is the Business Transferor's Notice to Transferee of Unemployment Tax Liability and Rate.

That is a long name for a simple idea: the buyer has a right to know what your unemployment tax account looks like before taking over your business.

Michigan law puts the duty on the seller. You, or your broker, agent or attorney, must complete the form and deliver it to the buyer.

When It Is Due

The buyer must receive the completed form at least two business days before the transfer of the business. In practice, it makes sense to deliver it during due diligence, well before closing week.

The state treats this seriously. A seller and its agent can face civil and criminal penalties for failing to give the buyer this information.

What It Tells the Buyer

• Your current unemployment tax rate
• Any unpaid amounts on your account
• Details on benefits charged to your account
• Employees you laid off in the year before the sale
• The names of your current employees

To fill it in, most sellers first request their account details from the Unemployment Insurance Agency using Form UIA 1346, the Disclosure of Transferor Account.

Why the Buyer Cares So Much

Your rate is not random. The agency sets it partly from your history: how many former workers drew benefits charged to your account. That history is called your experience.

In many sales, that experience moves to the buyer. A buyer inheriting a high rate will pay more in tax every quarter, so it wants to know before it agrees to a price.

When Your Experience Moves

Michigan makes the transfer mandatory in a common situation.

If the buyer acquires 75 percent or more of your assets, and within 12 months either keeps running the same or a similar business or uses your trade name or goodwill, your experience transfers to the buyer.

That describes most sales of an operating company. A buyer who keeps your name, your customers and your crew will almost always meet that test.

Smaller asset deals, or ones where the buyer starts something different, may work out differently. Ask your CPA or the agency how your deal is treated.

The Buyer's Side

The buyer has its own paperwork. A new employer that acquires assets, trade or employees from another business completes a successorship questionnaire with the agency.

That is the buyer's job, but your 1027 notice gives it the information it needs. A clear, complete notice makes the buyer's filing easier and avoids last minute questions.

Closing Out Your Account

Whatever happens to the experience, your company still owes tax on wages it paid. You run your final payroll through the closing date, file the last quarterly report and pay what is due.

If you transfer the whole business, you also complete Form UIA 1772, which reports a discontinuance or a transfer of payroll or assets, in whole or in part. Your payroll service or CPA usually handles this.

Your People on the Day

In an asset sale, your company pays its people through closing, and the buyer hires them onto its own payroll the next day. Staff who hear "same jobs, new owner" tend to stay, and buyers pay more for a team that stays.

Keep the news quiet until the deal is truly done. Closing dates slip, and telling people early creates risk if the buyer walks.

Fitting It Into the Timeline

The UIA notice sits next to the other closing week filings. Treasury's tax clearance and the escrow it controls are in our Form 5156 guide, and closing your Treasury accounts is in the Form 163 guide.

All of this is Michigan law. A company based in another state follows that state's rules instead.

Want to know what your company is worth before any of this matters? Send the short form or call (313) 555-0152. The bigger picture is on our how a sale works page.