Tax Rate Calculations/ Tax Rate Calculations/ Unemployment Benefit Unemployment Benefit

ChargesCharges

““Strategies for Maximizing Business Strategies for Maximizing Business Opportunities”Opportunities”

Employer ConferenceEmployer ConferenceOct 12, 2011Oct 12, 2011

New Employer Tax RatesNew Employer Tax Rates

Assigned new employer Base Tax Rate (2.5%), Assigned new employer Base Tax Rate (2.5%), plus pool cost charge and fund building charge. plus pool cost charge and fund building charge. (New employer rate varies each year based on Trust (New employer rate varies each year based on Trust Fund factors. Assigned for 2 - 3 calendar years)Fund factors. Assigned for 2 - 3 calendar years)

If acquiring an existing business - Assigned If acquiring an existing business - Assigned predecessor tax rate unless transfer of predecessor tax rate unless transfer of experience waived experience waived (Must be waived within 60 days (Must be waived within 60 days of the date of acquisition)of the date of acquisition)

Out-of-State Building/Highway Contractors - Out-of-State Building/Highway Contractors - Assigned maximum tax rateAssigned maximum tax rate

EmployerEmployerExperience RatingExperience Rating

Benefit Ratio: Based on employer’s Benefit Ratio: Based on employer’s experience consisting over last 4 completed experience consisting over last 4 completed fiscal years (July 1 through June 30)fiscal years (July 1 through June 30)

Charges for benefits paid are divided by Charges for benefits paid are divided by employer’s state unemployment taxable employer’s state unemployment taxable payroll for that periodpayroll for that period

Benefit ratio converted to percentage form and Benefit ratio converted to percentage form and applied to experience rating tax table to create applied to experience rating tax table to create Base Tax RateBase Tax Rate

Unemployment Benefit ChargesUnemployment Benefit Charges

For Tax Paying Employers: Charge claimant’s For Tax Paying Employers: Charge claimant’s last 30 working day/240 hour employerlast 30 working day/240 hour employer

Work days do not have to be consecutiveWork days do not have to be consecutive

Disputed claims - respond timely to all inquiries Disputed claims - respond timely to all inquiries by VEC staff to ensure effective participation in by VEC staff to ensure effective participation in the adjudication processthe adjudication process

Charged employer receives quarterly charge Charged employer receives quarterly charge statement identifying claimants and benefit statement identifying claimants and benefit amounts paid to themamounts paid to them

Additional Tax Rate CostsAdditional Tax Rate Costs

Pool Cost ChargePool Cost Charge:: Compensates for Compensates for charges that cannot be assigned to any specific charges that cannot be assigned to any specific employer employer (out-of-business, not-covered, higher than (out-of-business, not-covered, higher than max rate, etc)max rate, etc)

Fund Building Charge (.2%)Fund Building Charge (.2%):: Imposed Imposed when the trust fund balance does not exceed when the trust fund balance does not exceed 50% solvency50% solvency

Tax Rate NoticeTax Rate Notice Mailed in December notifying employer of tax Mailed in December notifying employer of tax

rate for upcoming calendar yearrate for upcoming calendar year

Reflects state unemployment taxable payroll Reflects state unemployment taxable payroll and unemployment benefits paid for last four and unemployment benefits paid for last four fiscal years fiscal years (July 1 through June 30) (July 1 through June 30) used to calculate used to calculate Base Tax Rate. Also includes Pool Cost Base Tax Rate. Also includes Pool Cost Charge and Fund Building Charge infoCharge and Fund Building Charge info

Tax RateTax Rate = = Base Tax RateBase Tax Rate + + Pool Cost Pool Cost ChargeCharge + + Fund Building ChargeFund Building Charge

Tax Rates normally assigned by calendar yearTax Rates normally assigned by calendar year

VEC Tax Rate InformationVEC Tax Rate Information

20112011 20102010 20092009 20082008New Employer Assigned New Employer Assigned

RateRate3.17%3.17% 2.98%2.98% 2.58%2.58% 2.52%2.52%

Minimum Computed RateMinimum Computed Rate 0.77%0.77% 0.58%0.58% 0.18%0.18% 0.12%0.12%

Maximum Computed RateMaximum Computed Rate 6.87%6.87% 6.68%6.68% 6.28%6.28% 6.22%6.22%

Pool Cost Charge Pool Cost Charge 0.47%0.47% 0.28%0.28% 0.08%0.08% 0.02%0.02%

Fund Bldg ChargeFund Bldg Charge 0.20%0.20% 0.20%0.20% n/an/a n/an/a

Average Tax Per EmployeeAverage Tax Per EmployeeState ComparisonsState Comparisons

Average Tax Rate ComparisonsAverage Tax Rate Comparisons

Pool Charge ProjectionsPool Charge Projections

Trust Fund Solvency ProjectionsTrust Fund Solvency Projections

Maximum Weekly Benefit AmountsMaximum Weekly Benefit Amounts

Reimbursable Reimbursable (Self-Insured) (Self-Insured)

EmployersEmployers All state agencies, many political subdivisions, All state agencies, many political subdivisions,

and many 501c3 non-profit organizationsand many 501c3 non-profit organizations

Do not pay quarter taxes like tax-paying Do not pay quarter taxes like tax-paying employers.employers.

Pay quarterly bill pro-rated based on Pay quarterly bill pro-rated based on employer’s reported wage amounts in employer’s reported wage amounts in claimant’s base period.claimant’s base period.

Claimant’s Base Period of Claimant’s Base Period of EmploymentEmployment

Reimbursable AccountsReimbursable Accounts Unique FeaturesUnique Features

May not be separating employer but gets May not be separating employer but gets charge due to claimant’s base period wages charge due to claimant’s base period wages (or (or alternate base period)alternate base period)

Pays dollar-for-dollar to reimburse Trust Fund Pays dollar-for-dollar to reimburse Trust Fund for benefits paid on pro-rated basisfor benefits paid on pro-rated basis

If claimant is later disqualified, employer If claimant is later disqualified, employer remains responsible for bill until over-payment remains responsible for bill until over-payment is recovered from claimantis recovered from claimant

New Information for 2011New Information for 2011 FUTA - Due to outstanding loans SUTA tax credit is FUTA - Due to outstanding loans SUTA tax credit is

reduced by reduced by .3%.3% (5.4% to 5.1%)(5.4% to 5.1%)

FUTA - Effective 7/1/2011 gross FUTA tax is reduced from FUTA - Effective 7/1/2011 gross FUTA tax is reduced from 6.2%6.2% to to 6%6%

Effective November 1, 2011, VEC will no longer accept Effective November 1, 2011, VEC will no longer accept magnetic media for filing quarterly tax reportsmagnetic media for filing quarterly tax reports

Employers with over 100 employees - must submit payroll Employers with over 100 employees - must submit payroll by either iFile or Web Upload for 4by either iFile or Web Upload for 4thth qtr. 2011 qtr. 2011

Enrollment and Secure filing:Enrollment and Secure filing:

www.webupload.tax.virginia.gov/user/loginwww.webupload.tax.virginia.gov/user/login www.ireg.tax.virginia.gov/VTOL/Login.seamwww.ireg.tax.virginia.gov/VTOL/Login.seam

ResourcesResources See See www.vec.virginia.govwww.vec.virginia.gov for the following: for the following:

The VEC office serving your areaThe VEC office serving your area

For state UI Tax information - ask to speak to a tax repFor state UI Tax information - ask to speak to a tax rep

For Benefits information - ask to speak to a supervisor For Benefits information - ask to speak to a supervisor or manageror manager

Virginia Employers’ HandbookVirginia Employers’ Handbook

FAQs - Employer UI Tax QuestionsFAQs - Employer UI Tax Questions

FAQs - Unemployment BenefitsFAQs - Unemployment Benefits

Virginia Unemployment Compensation ActVirginia Unemployment Compensation Act

Additional InformationAdditional Information

Try iFile or Web Upload for a new and Try iFile or Web Upload for a new and improved way to file your VEC and Department improved way to file your VEC and Department of Taxation information: of Taxation information: www.business.tax.virginia.govwww.business.tax.virginia.gov

Thank you for using the services of the Thank you for using the services of the Virginia Employment CommissionVirginia Employment Commission