Two states will enter their fifth year of holding a Title XII loan. Federal Law has a provision stating that effective the fifth year of the loan, the Benefit Cost Reduction (BCR) will be in effect adding up to 2.7% to the rate already in place. According to the Department of Labor, Indiana would have an add-on of 1.4% causing employers to pay at a 2.8% on the first $7,000. South Carolina would have a BCR of 1.0% for a total FUTA rate of 1.6% paid on the first $7,000.

Application was made by both governors’ to have the BCR waived for 2013. If the BCR is waived for Indiana and South Carolina, the FUTA tax rate will be 0.6% for South Carolina. An additional waiver was requested to avoid the credit reduction of 1.2%. Legislative changes were part of the agreement in 2012 between South Carolina and the federal government to avoid a credit reduction. The same type of agreement is expected for 2013. Indiana will be assessed a rate at 1.8% if the BCR is removed. (Virgin Island was assessed the BCR last year and will probably be assessed again in 2013.) Indiana and South Carolina are also looking into way to repay Title XII loans, which will remove them from the list of credit reduction states.

Shown below is a chart of states currently slated to lose a portion of their credit reduction for 2013. If any of these states repay their Title XII loan by November 10, 2013, they can regain their full FUTA tax credit reduction of 5.4% and pay at a FUTA tax rate of 0.6%.

According to the Department of Labor, the national unemployment rate has dropped to 7.4% as 162,000 claimants went back to work last week. The decrease in the national unemployment rate indicates that fewer claimants are collecting against the state unemployment trust funds thus allowing recovery of the funds. The increase in workers will also help improve the state unemployment trust funds due to the increase in contributions paid on the additional workers. The DOL has estimated a decrease of 5% for tax tables across the country. Please keep in mind that the states that decrease their schedules may not be the states where you have employment. The DOL has countered the expected 2014 savings with additional costs for 2014 due to expected wage base increases.

Vermont and New Jersey issued their fiscal-year rates. We are expecting New Hampshire rate notices in late August and Tennessee rate notices in September. Below is a list, based on last year’s rate issuances, of the expected state mail dates. Please keep in mind that it takes 3-5 days for USPS mail to arrive in our office.

Wage Base Increases in California and Delaware

A bill for Alaska employers is pending approval that would remove the automatic increases in state unemployment rates if the trust fund balance is at a safe level. The commissioner could delay part or all when the High Cost Multiple is 0.8% or higher.

In an attempt to regain solvency, California is considering raising the unemployment tax wage base to $9,500 for 2015 and $12,000 in 2016. The Solvency Proposal also would increase the maximum rate for 2015 from 5.4% to 6.2% for Schedule A – F. Schedule F+ would increase from 6.2% to 7.1%. The interest on the Title XII loan will be paid from the disability fund and the employer will not be assessed.

As of October 1, 2013, new employers in Connecticut will have 30 days to electronically register for a state unemployment account number. Acquiring in part or whole of a business, their assets or their trade or business will also have a 30-day deadline. A $50 penalty will be assessed for non-compliance. If a new employer submits a quarterly contribution return without registering, a $50 penalty will also be assessed.

Connecticut has confirmed the 0.9% FUTA tax reduction for 2013. The additional money will be due January 31, 2013 with the final filing of the Federal Form 940. Interest assets will be mailed in August and will be approximately $15 per employee.

Effective the first quarter of 2014, all Connecticut employers are required to file their quarterly contribution report and pay their contribution electronically. Employers may request a one year hardship. Currently, only employers with 250 or more employees are required to file electronically. The new filing method includes reimbursing employers.

The Governor of Delaware (Jack Markel) is expected to sign a bill into law that would increase the current taxable wage base from $10,500 to $18,500 effective January 1, 2014. The bill was written to help improve the trust fund balance and to relieve employers of the 2013 interest assessed on the Title XII loan. The wage base will fluctuate each future year as the trust balance increases and decreases. The trust fund will be reviewed each June 30th to determine the taxable wage base for the upcoming year.

As of July 1, 2013, Illinois employers with 100-249 employees will be required to file monthly wage reports. The monthly return for July will be due on August 31, 2013. Effective January 1, 2014, employers with 50-99 employees will be required to file monthly. Effective July 1, 2014, employers with 25-49 employees will be added to the list of monthly filings.

Effective July 1, 2013, the Massachusetts Fair Share Contribution was repealed. The department handling the claims will continue to operate until all claims are processed. Employers will remain subject to paying amounts due through ACH Debit. Enforcement of the amounts due will be achieved through audit, liens, subpoenas and levies. Section 188 of Chapter 149 can be found on the Massachusetts website.

Minnesota had a recent court determination where a mandatory transfer of experience was reversed. The successor had hired some of the executive staff temporarily in order to continue the operation of the company. Based on the continuation of officers, the transfer was mandated. The predecessor had laid off a large number of workers and the successor’s rate increased substantially. The court ruled that temporary transfer of officers in light of the continuance of business did not make the transfer mandatory and the new employer rate was assigned. Please contact your tax analyst if you have had a transfer of experience over the past three years. We will evaluate the transaction to see if it fits into the determination recently made by the state agency.

Missouri’s Governor (Jay Nixon) has vetoed H.B. 161 which would have established the UI integrity provision as mandated by the federal government. If the bill had been signed into law, benefit charges would not be relieved (for a particular claimant) if an employer had a pattern of two or more events where they did not respond timely or where 2% of all claims were not responded to timely. According to the Governor, the bill had provisions to expand misconduct that would disqualify a claimant. The Missouri Legislature adjourned on May, 30, 2013. An emergency session may be necessary to change the bill. If the UI Integrity is not put in place by October 22, 2013, Missouri employers will lose their credit reduction and pay at a rate of 6.0%. It is unlikely that Missouri legislatures will allow this to happen.

Nevada has issued bonds to repay their Title XII loan. Employers will have an additional tax added to their tax rate to pay the bond obligations and the administrative expense until the bonds are paid in full.

Legislation was enacted freezing the New Jersey rate schedule for the 2013-14 rate year. The rate schedule will range from 1.2% to 7.0% as it did for the 2012-13 rate year. The taxable wage base for the remainder of 2013 will be $30,900. The taxable wage base for 2014 will be $30,900.

New Hampshire employers will see a reduction in their computation effective July 1, 2013. An emergency surcharge of 0.5% was added to all employers in 2009 and an additional surcharge of 0.5% was added in 2010. On October 1, 2012, the first 0.5% surcharge was removed. The second 0.5% surcharge is expected to end as of December 31, 2013. The commissioner of the agency can add or remove the surcharge when applicable.

Through the issuance of bonds, New Jersey repaid their Title XII loan. Employers will pay at a 0.6% FUTA rate on a $7,000 wage base. Employers can expect to see a Bond Obligation tax in 2014 that will help pay the bonds. New Jersey assessments have been mailed to employers requiring payment for the interest of the Title XII loan. New Jersey has until September 31, 2013 to satisfy the interest payment.

New York issued notices to employers representing the interest due on the Title XII loan. An experienced rated employer’s state taxable for the time period beginning October 1, 2011 through September 30, 2012 is multiplied by 0.15% to obtain the amount due. New York must satisfy the interest payment by September 30, 2013. Beginning in 2014, the taxable wage base will begin to increase incrementally until it reaches $13,000 in 2026. The 2014 unemployment taxable wage base will be $10,300. Unemployment Insurance Reform, passed into law May, 2013, will allow a lower Interest Assessment Surcharge and allow the system to be adjusted in accordance with the fluctuation of the trust fund balance.

North Carolina passed legislation in an attempt to modernize their UI program. All four tiers of the Federal Emergency Unemployment Compensation have ended effective June 29, 2013. The minimum rate will increase from 0% to 0.06%. The maximum rate will increase from 5.7% to 5.76%. Effective October 1, 2013, all employers with 25 or more employees are to report the detailed information, by employee, electronically. Penalties and interest will be assessed for noncompliance.

Tennessee employers will see a drop in their overall tax rate. Rate Premium Table 3 will be in place as of July 1, 2013. Rates will range from 1.0% to 10.6%. The 0.6% surcharge that has been in effect since 2009 will not be in effect for the last two quarters of 2013. An announcement will be made after December 31, 2013 as to whether the 0.6% surcharge will be removed for the first two quarters of 2014.

Vermont repaid their Title XII loan. Employers will pay FUTA taxes at a 0.6% on the first $7,000 per employee. The rate schedule remains the same for the 2013-14 rate-year. The taxable wage base will remain at $16,000 for 2014. The taxable wage base for 2015 will be indexed to increase or decrease in accordance with the state average wage.

Washington will increase the 2014 taxable wage base to $41,300. The wage base for 2013 is $39,800

Wisconsin will use appropriated funds to pay the interest assessment due by September 30, 2013. The appropriated fund-distribution will remove the liability of payment from the employer, saving them approximately $10 per employee.


Contact CCC to see how we can save your organization time and money.
Contact our Sales Team
(800) 207-6926

Featured Videos

View All Videos

Latest News

Close

Sales

    Your Name:*

    Title:

    Company Name:*

    Company Address:

    Company City:

    Company State:

    Company Zip:

    Number of Employees:

    Your Email:*

    Phone Number:*

    Fax Number:

    Check the boxes below if you wish to receive information on any of the following:

    Unemployment Cost ControlTax Credits & Incentives (WOTC)Employment / Wage Verification

    Your Message:

    Employment & Income Verfication

      Your Name:*

      Title:

      Company Name:*

      Company Address:

      Company City:

      Company State:

      Company Zip:

      Number of Employees:

      Your Email:*

      Phone Number:*

      Fax Number:

      Your Message: