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Virginia joined a host of other states on August 10th by eliminating COVID-19 related benefit charges for contributory employers.  Governor Ralph Northam (D) signed H.B. 7001, which, among other things, relieves contributory employers from COVID charges which may have negatively impacted their 2022 unemployment tax rates.

Virginia Employment Commission (VEC) uses a benefit ratio calculation to compute unemployment tax rates for employers.  It uses a fiscal year from July 1 to June 30 for the four years prior to the rate year.  For 2022, the fiscal period would be July 1, 2017, through June 30, 2021.  The pandemic influenced benefit charges starting in March 2020 and continues to this point. However, the number of unemployed workers has diminished according to the Department of Labor, U.S. Bureau of Labor Statistics https://www.bls.gov/news.release/empsit.t05.htm.  In July 2020, the national unemployment rate was at 7.9, while for the same month in 2021, it dropped to 4.0.

The Bill signed this month specifically says, “the Virginia Employment Commission shall compute tax rates for Calendar Year 2022 by excluding pandemic related claim activity.”  It goes on to say that 2022 tax rates for employers “may be less than but shall not exceed the established rate for that employer for Calendar Year 2021”.  So not only is the VEC saying it will not charge employers for COVID-related claims, but it is also saying it will not increase rates for employers over what they had in 2021.   This is very good news for tax-paying employers in the state.

Many states had to borrow federal funding through a Title XII loan in order to keep their trust fund balances solvent.  However, Virginia has not entered that arena as of yet.   This could be due to the $862 million that is being deposited into the state’s unemployment trust fund as a result of H.B. 7001.  Tax-paying employers in Virginia should be pleasantly surprised when the 2022 tax rates are mailed out later this year, which historically, they have been mailed in mid to late December for the next calendar year.  Your CCC Tax Analyst will be sure to notify you once we receive this or any state’s unemployment tax rates.  If you have any questions about this, contact your CCC Tax Analyst.


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