Taxing Times

Massachusetts Bill H.90 “An Act financing a program for improvements to the Unemployment Insurance Trust Fund and providing relief to employers and workers in the Commonwealth” is currently pending Governor Charlie Baker’s approval. The bill has gained a lot of publicity as employer-friendly legislation that would prevent a potential increase (tax schedule E to G) of UI tax rates by 60% for some employers. With the massive UI payouts as a result of the pandemic, the commonwealth’s UI trust fund is likely to be insolvent by 2022. So in a move to prevent insolvency without dramatically increasing the UI tax schedule, Bill H.90 proposes an additional “excise rate” that will be assessed to employers along with their current UI contribution rate. The excise rate increases with the base UI contribution rate. You can view the proposed schedule below or view a separate attachment here.

Mass Bill H.90 Unemployment Excise Table

What does this mean to you?

It seems all but certain the proposed bill will be signed. Shortly thereafter, the Massachusetts DUA will have to work to get out all the 2021 Massachusetts Annual Tax Rate Notices  to employers which have been delayed. The notices should feature the new excise rate as well. Until those notices are issued, employers, their payroll providers or TPAs cannot file their quarterly employment and wage detail filings. Q1 2021 filings are typically due by 4/30/21. It is unclear if any extensions will result due to the delay in tax rate notices that are typically received between mid- December and mid- January.

As a tax-rated employer in Massachusetts that had to layoff or furlough employees due to the pandemic, there is a chance that the Covid-related charge relief efforts extended by the state kept you from significant tax increases. Raising the UI tax-rate schedule would have seriously reduced the positive effect of that relief. Depending on how severe or how long your reductions were (or still are) the smaller proposed “Excise Rate” might be palatable to you. As an employer who was fortunate enough not to be greatly affected by the pandemic, your outlook is likely less rosy as you figure out how to budget for this additional expense.

Whatever your viewpoint might be, the key to controlling unemployment cost is the same. It is now more important than EVER before to seize every opportunity you have to limit UI benefit charges to your account. With benefit charge payments higher than ever before and the new excise rate, the cost associated with missing or surrendering protest opportunities has become much higher.

D0 you feel like you don’t have the insight you need? Do you understand what your unemployment activity is telling you?¬† Does it feel like you’re paying claims you shouldn’t be?¬† Feel free to contact us here, we’re here to help in any way we can.