What’s New? Tax Credits & Incentives: WOTC-Work Opportunity Tax Credits

 

tax-creditsCCC combines cutting edge technology, experience, expertise and customized solutions to maximize your tax credit opportunities

Contact CCC at info@corporatecostcontrol.com or (800)207-6926, for a free analysis of current tax credits & incentives/WOTC process and projection of potential savings.


Unemployment Tax Update: My 2018 Tax Rate

UI Tax RateAs mentioned in our June tax blog, over half of the state agencies use the second quarter as the end date for rate computations.   Each state reviews the benefit charges, contributions and taxable payroll historically reported on a cumulative basis or with a one, three, four or five-year review ending June 30th       for each employer.    Not only is the experience (defined as the history of events) considered for each employer, the trust fund balance of the state must be reviewed.

The determination of the rate schedule or the multipliers used by a state for a given year, is determined through legislation.   Some state legislation is very specific on the dollar amount while other states use the dollar amount compared to the eligible number of workers.   Although a few states will release the determined rate schedule or multipliers well before the rates are issued, most states are working up until a week before the rates are mailed to the employer.

This certainly leaves a challenge for the payroll or tax manager trying to complete a budget for the costs of unemployment contributions paid to each state.   September and October 2018 budgeting will be here sooner than we would like to think.   How can an employer budget changes in rate charts and multipliers that have not been set by the state agencies?

One method is to project the 2018 tax rate by reviewing the trends of each agency and then applying a guestimate of the rate schedule and multipliers.   For example, in 2017, twenty-seven states had decreased rate schedules or multipliers and nineteen remained the same leaving only a handful of states who had increases.   If we look at the years 2014-2016, we will see similar numbers.    Since our year is half over, it is safe to use last year’s rate schedule and multipliers for budgeting purposes.   Adjustments can be made as the states release the rate schedule and multipliers.

Another complication employers face are acquisitions, mergers and divestures.   These three words have been expanded over the years with complicated transactions such as a demerger, reverse triangular merger, vertical and horizontal mergers just to name a few.    Although some transactions of this nature effect your tax rates as of the effective dates, many states wait until the next rate year to extract or combine the experience with another employer.  Almost all transaction effective the beginning of the year 2018, will generate a rate revision for the year.

So, we have reviewed state trends for rate schedule and multipliers and reviewed the figures to use for our organization.    We also looked at any merger, acquisition or divestiture that occurred in 2017 and the ones that might occur for 2018.     Now for the final step – determining an estimated taxable payroll.   More than half the states increased their taxable wage base for 2017 and it is likely that will be repeated for 2018.    Then there is the growth of the business.  Do we expect a 20% growth rate or maybe higher?    This too is a historical review based on the current trends of the economy and the trends of the employer’s business.    The expected growth rate of your organization, the increase in taxable wage base and the evaluation of employees acquired or divested in 2017 and expected for 2018 should be considered when estimating the 2018 taxable wages.   The resulting estimated taxable payroll can be multiplied by the projected rate to determine the budgeted cost for 2018 contributions.

If this sounds complicated and time consuming, well you are correct.   Corporate Cost Control provides rate projections, upon request, to their clients and prospects.  Please contact your Tax Analyst or me, Norma Green, Tax Director, at (800) 207- 6926, EXT. 418 or ngreen@corporatecostcontrol.com, for more information on rate trends and rate projections.


Guideline: 2017 UWC Convention in Boston

The National Foundation for Unemployment Compensation and Workers’ Compensation is hosting the 2017 National Unemployment Insurance Issues Conference June 27-29, 2017 at the Boston Marriott Copley Place Hotel in Boston Massachusetts. CCC’s CEO Jay Rooney, will be a featured presenter along with other experts in the industry.   Join this national discussion, learn from experts, and Make UI history with us in Boston!

Register here 

boston-kyleklein

photo credit: Kyle Klein

We look forward to seeing you all at the conference!

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