Unemployment Insurance benefits are financed by employers through the payment of taxes. Because of the severe economic recession, unemployment has risen to a current level of 9.1% nationally. In October of 2009, Connecticut’s Unemployment Trust Fund became insolvent and in order to continue to pay claims the state has had to borrow from the United States Department of Labor. These borrowings have been interest free through 2010 due to the American Recovery and Reinvestment Act of 2009, which waived the interest on unemployment loans. This benefit was not extended with the most recent legislation passed by Congress; therefore all states who have borrowed funds must begin paying back interest as of 2011.
Connecticut has projected that the total interest costs will be approximately $100 million dollars. In order to collect the interest due, a law was passed by the CT General Statutes Section 31-225a requiring each employer to pay a special assessment beginning in 2011 and running through 2013. The first annual assessment will be levied against Connecticut’s employers on August 1, 2011 with payment due August 31, 2011. Based on preliminary projections, which may change based on several variables; the average cost to the employer will be $40 per employee. For example, a business that employs 15 workers can expect a Special Assessment bill of $600.
The 2011 Special Assessment figures are estimates and subject to change. More current data will available and included in upcoming Quarterly Employer notices.
ACTION ITEM: Connecticut employers should budget for the unemployment assessment they will be receiving.
Thomas F. Scanlon, CPA, CFP®
Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
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……………..Federal interest assessment Since Florida has borrowed funds from the federal government to pay unemployment compensation benefits and the loans will not be repaid by January 1 2012 the state will have to pay interest on the funds. Employers should have received this notice Form UCT-27Fi by the end of February payment is due by June 30 2011…..Tax rates The Department mailed the 2011 unemployment tax rate notices to Florida employers in mid-December. ……..Unemployment compensation gives partial temporary income to workers who lose their jobs through no fault of their own and are able and available for work.