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July 3, 2012

Colorado Issues Over $630,000,000 in Bonds to Stabilize Unemployment Insurance

Colorado Issues Over $630,000,000 in Bonds to Stabilize Unemployment Insurance
Colorado Issues Over $630,000,000 in Bonds to Stabilize Unemployment Insurance
In a letter from Colorado Governor John W. Hickenlooper and Treasurer Walker Stapleton, Colorado employers were informed of the benefits of a recent bond offering by the State of Colorado.

UITF Was Financially Weak from 2008 Recession

The Colorado Unemployment Insurance Trust Fund (UITF) was destabilized by the 2008 recession. The UITF owed more than $600,000,000 to the federal government in April 2011 and was still projected to owe more than $100,000,000 at the end of June 2012.

Bond Proceeds Used to Stabilize UITF

By using the bond proceeds to stabilize the UITF, the governor asserts the following up-front savings to Colorado employers:

  • Saves most Colorado businesses between $20-$120 per employee in 2013-2014
  • “Turns off” the solvency surcharge to businesses for calendar year 2013 for the first time since 2004
  • Moves the rates for employers based on a positive fund balance by June 30
  • Allows bond assessments to count toward businesses’ experience ratings
  • Creates potential for future lower rates as the UITF reaches financial health more quickly

The bond issuance also provides financial health to the UITF to benefit the fund for the long term through the following methods:

  • Triggers solvency measures of HB11-1288, which will help prevent federal borrowing in future economic downturns
  • Decreases interest cost associated with negative balance by half (from 3% to 1.4%), and stabilizes payments to make them more predictable
  • Provides the UITF fund with a greater buffer that will promote quicker growth of UITF balance to protect employers from higher rates during future economic downturns

Bond Assessments Will Affect Unemployment insurance Premiums

According to the governor, principal and interest will be repaid as follows:

Bond Principal Repayments (Billing notices will begin in November 2012):

  • Annual bond repayments will be streamlined with the regular billing process to minimize confusion and avoid additional bills sent to employers.
  • Statements will denote what percentage will be used for bond payment, currently estimated at about 18-25%.

Bond Interest Repayments (Billing notices will begin in September 2012):

  • Interest payments will mirror the billing process in prior years for Federal interest payments associated with the UITF’s negative Federal balance.
  • Similar to Federal interest payments, this will be collected through a separate assessment billed in September.
  • Bond interest will be charged only to businesses that have an experience rating of less than +7.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the Colorado UITF.

July 18, 2011

Rhode Island Changes 2012 Unemployment Taxable Wage Base Calculation

Filed under: News — Tags: , , , — Vision @ 2:48 pm
Rhode Island Changes 2012 Unemployment Taxable Wage Base Calculation
Rhode Island Changes 2012 Unemployment Taxable Wage Base Calculation
As part of the recently enacted fiscal-year 2012 state budget (article 4), Rhode Island changed the way in which the unemployment taxable wage base is calculated in §28-43-7 of the General Laws in C. 28-43.

2012 Will Be the First Year the New Formula Is Used

Beginning in 2012, the formula will be to calculate an “average annual wage in covered employment” for the calendar year preceding the “computation date” and multiply that figure by 46.5%. The resulting product, rounded up to the nearest $200, will be the unemployment wage base for the year following the computation date.

Computation Date Will Be September 30

The computation date will be September 30. For example, to calculate the unemployment wage base for 2012, the computation date will be September 30, 2011 and the look-back year will be 2010.

Negative Balances Can Lead To Surcharge

Employers with a reserve account percentage of negative twenty-four or less will have a taxable wage base of the standard taxable wage plus $1,500.

Contact Vision Payroll Today

Contact Vision Payroll if you have any further questions on the Rhode Island unemployment taxable wage base calculation.

July 17, 2011

NJ Lowers Unemployment Tax Rates for 2012 Rate Year

Filed under: News — Tags: , , , , , , — Vision @ 3:06 pm
NJ Governor Chris Christie
NJ Governor Chris Christie
New Jersey Governor Chris Christie recently signed into law A-3819 (S-2730), which reduces the unemployment tax rates that employers would have otherwise had to pay during the 2012 rate year (July 1, 2011 through June 30, 2012). The rates will increase, however, from the rate year 2011 rates.

Rates Will Be Determined Using Schedule D for 2012 Rate Year

During the 2011 rate year (July 1, 2010 through June 30, 2011), rates for employers in New Jersey were determined based on the rates in column C of the tax table. Without the passage of A-3819, employers would have had their rates for 2012 determined by column E of the tax table. Under A-3819, rates in 2012 will be determined by reference to column D of the tax table.

Minimum and Maximum Rates to Increase for 2012 Rate Year

The minimum rate for employers will increase from 0.5% for the 2011 rate year to 0.6% for the 2012 rate year. Had the rates changed to Schedule E, the minimum rate would have increased to 1.2%. The maximum rate for employers will increase from 5.8% for the 2011 rate year to 6.4% for the 2012 rate year. Had the rates changed to Schedule E, the maximum rate would have increased to 7.0%.

New Employer Rate Also Set to Increase for 2012 Rate Year

The rate for new employers will increase from 2.8% for the 2011 rate year to 3.1% for the 2012 rate year. Had the rates changed to Schedule E, the new employer rate would have increased to 3.4%.

Contact Vision Payroll Today

Contact Vision Payroll if you have any further questions on A-3819 and the impact on New Jersey unemployment tax rates.

April 16, 2011

New Mexico Governor Martinez Vetoes Higher Unemployment Tax Rates

Filed under: News — Tags: , , , , — Vision @ 7:01 pm
Governor Susana Martinez
Governor Susana Martinez
On April 8, 2011, Governor Susana Martinez vetoed portions of HB 59. The portion vetoed would have changed the contribution schedule from a floating schedule for 2012 to Schedule 3.

Schedule 3 Seen as Counter-Productive

According to Governor Martinez, “I do not support increasing job-killing taxes on small businesses while we are struggling to recover from a recession. Making it more expensive for small businesses to hire people would be counter-productive to our efforts to put more New Mexicans back to work.”

Protection of the Solvency of the Unemployment Fund Is a Priority

Governor Martinez also indicated support for returning to Schedule 1 for 2012. “I have already begun working with members of the legislature on a plan that will protect the solvency of the fund and keep the contribution rate locked at Schedule 1, in order to help small businesses create more jobs. I intend to include this issue on the agenda for the upcoming special session on redistricting. I seek a bi-partisan solution that will protect the solvency of the Unemployment Fund without crippling job growth.”

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on changes to New Mexico unemployment taxes.

April 9, 2011

Illinois Adds Unemployment Tax Surcharge and Increases Wage Base

Filed under: News — Tags: , , , , , , , — Vision @ 5:59 pm
Illinois Adds Unemployment Tax Surcharge and Increases Wage Base
Illinois Adds Unemployment Tax Surcharge and Increases Wage Base
Illinois Governor Pat Quinn recently signed HB 1030 into law. The new law adds an unemployment tax surcharge, increases the taxable wage base, and reduces maximum benefits, among other provisions.

Surcharge Is for First Quarter of 2011

For the first quarter of 2011, employers are now required to pay a surcharge of 0.50% of taxable wages. Up to $90,000,000 of this surcharge is to be earmarked for interest payments for interest required to be paid under Title XII of the Social Security Act or for transfers to the state’s account in the unemployment trust fund.

Taxable Wage Base Will Increase in 2012

The taxable wage base will increase from $12,960 in 2011 to $13,560 in 2012.

Further Surcharge May Apply in 2012

If necessary to further interest payments, a surcharge will also apply to the first quarter of 2012 and the 2013 wage base will remain at $13,560. Otherwise, the 2013 wage base is scheduled to revert to the 2011 level of $12,960.

Maximum Benefits Reduced Starting in 2012

The new law also reduces the maximum total amount of benefits for an eligible individual, for specified benefit years starting in 2012, to 25 (instead of 26) times his or her weekly benefit amount plus dependents’ allowances, or to the total wages for insured work paid to such individual during the individual’s base period, whichever amount is smaller.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the changes to Illinois unemployment taxes.

February 21, 2011

Massachusetts Freezes Unemployment Tax Rate Schedule for 2011

Filed under: News — Tags: , , , , , , , , , — Vision @ 6:08 pm
MA EOLWD Secretary Joanne F. Goldstein
Governor Deval Patrick recently signed legislation that will provide immediate relief to Massachusetts’ businesses by freezing employer contributions to the Unemployment Insurance (UI) Trust Fund at current levels. This new law prevents a scheduled rate hike from taking effect, helping to save businesses $402 million this year. Although the legislation freezes the rate schedule for 2011, individual employer’s rates may increase or decrease from 2010. The rate change is determined by the change in the employer’s Experience Rating.

Legislation Said to Position State for Continued Economic Recovery

“Without this legislation employers would have seen an average increase of $228 per employee,” said Governor Patrick. “We want to encourage a positive climate for employers and by signing this bill we are helping to position the state for continued economic recovery.”

Employer Contributions Tied to Trust Fund Levels

Employer contributions into the UI Trust Fund are tied to the amount of reserves in the trust fund. By law, a scheduled increase was triggered on January 1, 2011, which would have caused an increase in the average contribution per employee of $228 for 2011. In order to reduce costs for Massachusetts businesses, Governor Patrick and the Legislature agreed to freeze the contribution at a lower rate schedule (Schedule E). This measure will not impact benefit levels or eligibility for persons currently collecting unemployment benefits.

Notice of Employer’s Unemployment Insurance Contribution Rate for 2011 to Be Released

Now that the legislation has been passed, the Massachusetts Division of Unemployment Assistance (DUA) is expected to release through QUEST the Notice of Employer’s Unemployment Insurance Contribution Rate for 2011. This notice contains information on each employer’s contribution rates, including the following:

  • Unemployment Insurance (UI) Rate,
  • Universal Health Insurance (UHI) Rate,
  • Workforce Training Fund (WTF) Rate, and
  • Experience Rating

Contact Vision Payroll for Further Information

Contact Vision Payroll for further information on the unemployment tax rate schedule in Massachusetts for 2011.

August 13, 2010

Question of the Week: What is Place of Residence?

This week’s question comes from Bonnie, a business owner. We tested our multi-state employees for unemployment purposes based on Localization of Services, Base of Operations, and Place of Direction or Control. For some employees we were able to determine the appropriate state, but for some we weren’t. Now we need to test based on Place of Residence. What is Place of Residence? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:

  1. Localization of Services
  2. Base of Operations
  3. Place of Direction or Control
  4. Place of Residence

The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.

For the Place of Residence test, determine if the employee performs any service in the state in which the employee resides. If the employee performs some services in the state where the employee resides, that state is the state where the employee will be covered.

Contact Vision Payroll if you have further questions.

August 6, 2010

Question of the Week: What is Place of Direction or Control?

This week’s question comes from Kenneth, an HR Director. We tested our multi-state employees for unemployment purposes based on Localization of Services and Base of Operations. For some employees we were able to determine the appropriate state, but for some we weren’t. Now we need to test based on Place of Direction or Control. What is Place of Direction or Control? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:

  1. Localization of Services
  2. Base of Operations
  3. Place of Direction or Control
  4. Place of Residence

The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.

For the Place of Direction or Control test, determine if the employee performs any service in the state from which the services are directed and controlled. Services are directed or controlled in the place where basic authority resides and where general and immediate control originates. If the employee performs some services in the state that is the Place of Direction or Control for that employee, that state is the state where the employee will be covered. If not, go to the Place of Residence test.

Contact Vision Payroll if you have further questions.

July 30, 2010

Question of the Week: What is Base of Operations?

This week’s question comes from Angela, an office manager. We tested our multi-state employees for unemployment purposes based on Localization of Services. For some employees we were able to determine the appropriate state, but for some we weren’t. Now we need to test based on Base of Operations. What is Base of Operations? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:

  1. Localization of Services
  2. Base of Operations
  3. Place of Direction or Control
  4. Place of Residence

The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.

For the Base of Operations test, determine if the employee performs some services in the state that is the base of operations for that employee. The base of operations is where the employee starts work, goes to receive instructions from the employer, replenishes supplies, maintains records, etc. Not all employees necessarily have a base of operations. If the employee performs some services in the state that is the base of operations for that employee, that state is the state where the employee will be covered. If not, go to the Place of Direction or Control test.

Contact Vision Payroll if you have further questions.

July 23, 2010

Question of the Week: What is Localization of Services?

This week’s question comes from Matthew, a business owner. I read that we need to cover employees for unemployment purposes based on “Localization of Services”. What is Localization of Services? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:

  1. Localization of Services
  2. Base of Operations
  3. Place of Direction or Control
  4. Place of Residence

The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.

For the Localization of Services test, first determine if the employee performs all services entirely in one state. If yes, that state is the state where the employee will be covered. If not, determine if the services performed out of any state where the employee works are incidental (e.g., temporary or transitory) to the services performed in that state. If yes, that state is the state where the employee will be covered. If not, go to the Base of Operations test.

Contact Vision Payroll if you have further questions.

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