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2018Every year the bulk of unemployment tax rate notices begins with a flurry in late November. The storm does not let up until mid-late January. For 2018, we only have eight more states who will issue. New York and Massachusetts are usually the last two states to send out tax rates. Both states usually provide their rates to employers on-line a few weeks before issuance of the paper form. Only sixteen states increased their taxable wage base this year with seven states lowering their taxable wage base. The taxable wage base for all other states remained the same. A few states have increased their rate charts this year while the majority either stayed the same or decreased.

Why are the states needing less contributions from employers? The standards for the trust fund balances have increased from prior years as the Average High-Cost Multiple (AHCM) requirements increase. The level of most trust fund balances have begun to recover to acceptable levels even with the increased expectations from the U.S. DOL. More individuals are working, which increases the revenue coming into the state agencies. The number of eligible claimants collecting benefits has lowered over the past two years. This has allowed the unemployment trust funds to improve.

Are the states solvent? During the Great Recession, over thirty states became insolvent and needed to borrow from the federal government to pay claimants benefits. According to the report issued by the U. S. DOL last February, only about half the nation was considered solvent based on the new AHCM requirements. In February 2018, a new report will be issued by the U.S. DOL, and from the numbers we see released by the state agencies, it appears more states have met the new requirements.

California and the Virgin Islands still owe money under the Title XII loan provision. California expects to repay theirs before the November 10, 2018 deadline. If claims increase in California as a result of a downturned economy, the repayment may not be feasible. Virgin Islands has no idea when they will repay their Title XII Loans. Keep in mind that if a state requests an advance under the Title XII provision, they have two years (counting from the first January 1st) to repay the loan without interest.

Please be sure to forward any unemployment tax rate notices that you receive directly to your tax analyst. Each rate notice contains a protest deadline, and about half of the states allow a voluntary contribution that could decrease an employer’s rate. Both the protest and voluntary contribution option have strict deadlines and can cost an employer unnecessary tax dollars. Every year, the tax department of Corporate Cost Control prepares a Tax Annual Report that provides a rate comparison, an analysis of the increase/decrease of the tax rate for each state and supplies a report that assigns a value to the unemployment claims from a tax perspective.

January 1, is always a popular date for employers to reorganize or merge their accounts. If this has occurred with your organization, please let us know. The state agencies always need to be informed if any type of change occurs. Most transactions involving common ownership are mandatory, and the January 1 effective date can cause the rates to change effective immediately. Corporate Cost Control provides a comprehensive service that notifies the state unemployment agencies of transactions of this nature. We can also handle future acquisitions that occur and evaluate the actions that need to be taken with each agency. State and Local withholding are provided upon request. If you have any type of transaction that occurred recently or expect to close this year, please contact your Tax Analyst, and they will provide some direction.


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