“Despite the passage of an unemployment insurance law that legislators praised as a relief package for employers, business owners are getting hit with higher tax bills due to what some call an unintended consequence or a loophole of the pandemic-era unemployment crisis.
The state’s unemployment levels have stabilized since they hit record-high levels in the first months of the pandemic, but the million-plus claims swallowed the state’s UI trust fund. The fund is expected to face a roughly $4 billion deficit by the end of 2021 — in big part due to federal advances that the state has to repay.
Business owners who lay off workers typically pay more as the jobless claims affect their UI employment contribution rating, leading to a higher tax bill. The CARES Act passed in March 2020 prevents states from charging employers — most of them private, for-profit companies — for the cost of COVID-related unemployment claims until at least Dec. 31. But those claims were sent to a separate fund called the solvency fund.
The COVID-related jobless claims were shifted from an employer’s own account, which is used to calculate the experience rate, to the solvency fund, shifting the burden paying for COVID-related claims to all employers — even companies that didn’t lay off employees” (Read full article by The Republican article)
What do you need to do?
First, if you haven’t done so, log into your DUA account and read through your notice. A link has been provided for your convenience
(DUA Employer Login). Once logged in, follow the steps list below:
- Click on the “Correspondence” option
- Select the date range of 4/5/2021 to the present day,
- Select “other docs” in the “correspondence type” dropdown box,
- Click the “Search” button
- Your notice should appear under the name “Director's Letter for Annual Rate Notice”.
- Click the link a PDF of your notice will appear.
If you don’t have access to your DUA account, you may want to inquire who within your organization can assist you. If you use an outsourced payroll provider, they should also be able to provide you with your 2021 notice.
Second, the State has issued an extension for the payment of your first quarter filings.
Please note, the extension is for payment only, the actual filing is still due by April 30, 2021. The State approved this extension to allow additional time for Employers to prepare for their contributions.
Third, get involved and let your voice be heard! Businesses, associations and interest groups are pulling together and making appeals to the State. The appeals include presenting the hardships some employers are already experiencing, discussing alternatives for consideration, and in general letting our legislature know that this increase without notice is not ok or business as usual.
Amy Pitter, President & CEO of the MSCPA, wrote a letter to Governor Baker:
“In a letter to Governor Baker last week, Amy Pitter, MSCPA President & CEO, called on the administration to act with urgency “to offset the unanticipated surge in rates impacting thousands of businesses by injecting federal stimulus dollars to address the UI Trust Fund’s insolvency.” Pitter stated that the significant increase to the employer’s solvency rate contribution overturned any relief for small businesses from the recent freeze to UI contribution rate.”
(Read Amy Pitter's complete letter to Governor Baker)
This Solvency Assessment action leaves no business unaffected. Discussions, business outreach and legislative decisions are moving quickly. Be a part of the action and let your State government know how your business is impacted by their decisions. Should you have any questions, please reach out to your
advisors.
