I got a crazy inquiry from the state of Alabama today. I can't reproduce it without redacting a lot of confidential numbers and such, but essentially they said that we had originally filed to pay unemployment taxes in Alabama in March of 2009, but our first payroll report was not until April of 2009. I said, sure, once we knew we were going to start business in Alabama, I applied for all my Alabama registrations at one time to make sure they were in place for the start of operations (this includes corporate registration with the secretary of state, request for a taxpayer ID number, eGov account, state sales tax, state lodging tax, state boat rental tax, County sales tax, county boat rental tax, unemployment tax, and employee tax withholding). I am sure I am forgetting a few, and to make things more fun, every state is different. Tennessee, for example, has an entirely different set of tax types for businesses that I still do not fully understand.
Anyway, apparently most of these registrations must be obtained in advance, before starting business. BUT, at least in Alabama, I was told today it is ILLEGAL (yes, they used that word) to register for the unemployment tax system before your first payroll in the state. Apparently, one must register in arrears. Because of this, I was told my account has to be shut down and I have to be issued a new account number (which of course means more paperwork for me making the switch at my payroll company). All of this over 4 years later because I did not have any payroll in one month and had the naive notion that it was better to have all my government wastepaper in place before I started operations. I got the strong impression that this was the results of bureaucrats searching hard for something to keep themselves busy.