Interest of Title XII loans drop!

The interest rate charged by the federal government will reduce from 2.9430% to 2.5765% for 2013. Employers with outstanding Title XII loans will need to pay the interest due by September 30, 2013. The interest may not be paid out of the state trust fund. If a state does not meet the September 30th deadline, all employers of the state will lose their entire FUTA tax credit reduction of 5.4% resulting in a rate of 6.0% based on the first $7000 in wages per employee. Interest payments have been in place since 2011 (at a rate of 4.0869%). All employers for the prior two years satisfied the interest loan payment within the September deadline.

Mail delivery stops in August!

Saturday mail delivery will stop in August. What effect will this have on unemployment taxes? Many states allowed for a postmarked mail date deadline for quarterly filings, voluntary contributions and rate protests. Some states will need to adjust their deadlines to received dates providing employers with less flexibility. Employers will need to make plans to file within the received deadlines to avoid the high cost of overnight delivery or penalties assessed by a state.
23 states increase their wage base

Twenty three states increased their taxable wage base from 2012 to 2013.

With the exception of Georgia, the taxable wage base of the twenty three is determined by comparing the trust fund balance with the total number of insured employees. States that have the ability to change their unemployment tax rates can recover much quickly during a downturn in the economy. Twenty two states have a fixed wage base which can only be changed with legislation. At the beginning of the recession, most legislatures believed the fixed taxable wage base contributed to the lower trust fund balance and the inability of a state to remain solvent. A recent study conducted by the Department of Labor disagreed with the fixed wage base as being the sole contributor. In spite of the study, the FUTA legislators are still in favor of an increased FUTA flexible taxable wage base of $15,000. The passage of the federal flexible wage base would mandate all states to equal or exceed the current FUTA wage base in effect for a given year.

Illinois employers will begin the monthly filing as of February 28, 2013. The monthly wage report will need to be filed through TaxNet. The larger employers are required to be on board with the monthly filing quicker than the smaller employer. The following schedule is based on the number of employees reported by the employer in 2012 and reflects the date the employer must comply:

250 employees – January 1, 2013
100 employees – July 1, 2013
50-99 employees – January 1, 2014
25-49 employees – July 1, 2014

Florida stated that the surcharge for 2013 would be dropped due to the state repaying their Title XII loan by mid-year resulting in no interest obligation. The agency was incorrect in this evaluation and they will be subject to an interest payment. Florida is looking into an alternative plan to repay the Title XII loan and avoid issuing an employer surcharge for 2013.

Michigan has issued numerous revised 2013 rate notices. Their new system (MiDAS) erroneously assigned a 3.0% penalty rate to employers based on a missing quarterly contribution return or the detail. After receiving numerous protests, the state realized the error and issued corrected 2013 tax rate notices and 2012 revised rate notices (issued in December of 2012).

The Massachusetts House of Representatives passed a bill to allow Rate Schedule E to remain in place. If the Senate passes the bill, it will be the fourth year in a row to have the rate schedule frozen at Schedule E as opposed to the higher rate Schedule G.

New York rates are issued in February. Rates will continue to range from 1.5% to 9.9%, which is the highest rate schedule possible. New York is a voluntary contribution state and they also permit a joint rate. Employers have until March 31, 2013 to make a voluntary contribution or to apply for a joint rate calculation. If you are interested in the joint account feature, please contact your tax analyst.

Utah has pending legislation to reduce the social cost from 0.5% to 0.4%. The bill was passed by the Senate and is now being reviewed by the House of Representatives. If the bill passes into law, 2013 will be the second consecutive year to realize a reduction in the social cost from the social cost originally issued.

If you have any questions or concerns, please contact Norma Green at (800) 207-6926, EXT. 418 or ngreen@corporatecostcontrol.com.


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