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Tax Rate Calculations/ Unemployment Benefit Charges

Tax Rate Calculations/ Unemployment Benefit Charges. “Strategies for Maximizing Business Opportunities” Employer Conference Oct 12, 2011. New Employer Tax Rates.

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Tax Rate Calculations/ Unemployment Benefit Charges

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  1. Tax Rate Calculations/ Unemployment Benefit Charges “Strategies for Maximizing Business Opportunities” Employer Conference Oct 12, 2011

  2. New Employer Tax Rates • Assigned new employer Base Tax Rate (2.5%), plus pool cost charge and fund building charge. (New employer rate varies each year based on Trust Fund factors. Assigned for 2 - 3 calendar years) • If acquiring an existing business - Assigned predecessor tax rate unless transfer of experience waived (Must be waived within 60 days of the date of acquisition) • Out-of-State Building/Highway Contractors - Assigned maximum tax rate

  3. EmployerExperience Rating • Benefit Ratio: Based on employer’s experience consisting over last 4 completed fiscal years (July 1 through June 30) • Charges for benefits paid are divided by employer’s state unemployment taxable payroll for that period • Benefit ratio converted to percentage form and applied to experience rating tax table to create Base Tax Rate

  4. Unemployment Benefit Charges • For Tax Paying Employers: Charge claimant’s last 30 working day/240 hour employer • Work days do not have to be consecutive • Disputed claims - respond timely to all inquiries by VEC staff to ensure effective participation in the adjudication process • Charged employer receives quarterly charge statement identifying claimants and benefit amounts paid to them

  5. Additional Tax Rate Costs • Pool Cost Charge: Compensates for charges that cannot be assigned to any specific employer (out-of-business, not-covered, higher than max rate, etc) • Fund Building Charge (.2%): Imposed when the trust fund balance does not exceed 50% solvency

  6. Tax Rate Notice • Mailed in December notifying employer of tax rate for upcoming calendar year • Reflects state unemployment taxable payroll and unemployment benefits paid for last four fiscal years (July 1 through June 30) used to calculate Base Tax Rate. Also includes Pool Cost Charge and Fund Building Charge info Tax Rate= Base Tax Rate + Pool Cost Charge + Fund Building Charge • Tax Rates normally assigned by calendar year

  7. VEC Tax Rate Information

  8. Average Tax Per EmployeeState Comparisons

  9. Average Tax Rate Comparisons

  10. Pool Charge Projections

  11. Trust Fund Solvency Projections

  12. Maximum Weekly Benefit Amounts

  13. Reimbursable (Self-Insured) Employers • All state agencies, many political subdivisions, and many 501c3 non-profit organizations • Do not pay quarter taxes like tax-paying employers. • Pay quarterly bill pro-rated based on employer’s reported wage amounts in claimant’s base period.

  14. Claimant’s Base Period of Employment

  15. Reimbursable AccountsUnique Features • May not be separating employer but gets charge due to claimant’s base period wages (or alternate base period) • Pays dollar-for-dollar to reimburse Trust Fund for benefits paid on pro-rated basis • If claimant is later disqualified, employer remains responsible for bill until over-payment is recovered from claimant

  16. New Information for 2011 • FUTA - Due to outstanding loans SUTA tax credit is reduced by .3%(5.4% to 5.1%) • FUTA - Effective 7/1/2011 gross FUTA tax is reduced from 6.2% to 6% • Effective November 1, 2011, VEC will no longer accept magnetic media for filing quarterly tax reports • Employers with over 100 employees - must submit payroll by either iFile or Web Upload for 4th qtr. 2011 Enrollment and Secure filing: www.webupload.tax.virginia.gov/user/login www.ireg.tax.virginia.gov/VTOL/Login.seam

  17. Resources See www.vec.virginia.gov for the following: • The VEC office serving your area • For state UI Tax information - ask to speak to a tax rep • For Benefits information - ask to speak to a supervisor or manager • Virginia Employers’ Handbook • FAQs - Employer UI Tax Questions • FAQs - Unemployment Benefits • Virginia Unemployment Compensation Act

  18. Additional Information • Try iFile or Web Upload for a new and improved way to file your VEC and Department of Taxation information: www.business.tax.virginia.gov • Thank you for using the services of the Virginia Employment Commission

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