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8/9/11
Information provided by the State of Wisconsin Department of Workforce Development
Due to the recent national recession, many states including Wisconsin exhausted state funds to pay Unemployment Insurance (UI) benefits to record numbers of claimants. As a result, states such as Wisconsin were required to borrow from the federal government to pay this record number of claims. Currently, Wisconsin is one of 30 states with outstanding balances to the federal government.
The federal government began charging states interest on these borrowed funds effective January 1, 2011. Wisconsin statute provides for a special assessment for repayment of the interest.
On August 3, 2011, Special Assessment Billing Notices started mailing to employers whose taxable payrolls for calendar year 2010 were greater than $25,000. The notices include options for payment which are due September 9, 2011.
For more information, contact:
WRA’s Hotline Team • 800.589.3211 • hotline@wirestaurant.org -OR-
Wisconsin’s DWD • UI Tax Staff • 608.261.6700 • taxnet@dwd.wisconsin.gov
Frequently Asked Questions
What is the Special Assessment for Interest?
Due to the recent national recession, many states including Wisconsin exhausted their state funds to pay Unemployment Insurance (UI) benefits to record numbers of UI claimants. As a result, states such as Wisconsin were required to borrow from the federal government to pay this record number of claims. Currently, Wisconsin is one of 30 states with outstanding balances to the federal government. The federal government began charging states interest on these borrowed funds effective January 1, 2011, and the Special Assessment for Interest is the mechanism Wisconsin has in statute to cover this interest payment.
Who is being assessed this interest?
In accordance with Wisconsin statute, the only employers who are affected are those who are subject under unemployment law as of the date the rate is established and whose taxable payrolls for calendar year 2010 were greater than $25,000. The rate per the statute for reimbursable employer is set at 75% of the rate of taxable employers.
What is the final Special Assessment tax rate?
The rate for all taxable employers is .2249% and .1687% for all reimbursable employers. Per Wisconsin Statute the rate for reimbursable employers is 75% of the taxable employer rate.
How will my interest bill be calculated?
The bill will be calculated as a fixed rate multiplied by an employer’s 2010 calendar year taxable payroll. For example, a taxable employer with total taxable payroll of $500,000 in calendar year 2010, at the rate of .2249% the calculation would be as follows:
$500,000 x .002249 = $1,124.50
- Note that in 2010, the taxable wages per an employee are capped at the wage base of $12,000.
Why does the rate used to determine my special assessment differ from the one included in the June special assessment notice?
The rate included in the June notice was qualified as an "estimate." Since that notice was drafted, unemployment insurance officials have obtained a more certain figure for all taxable wages and the amount of funds needing to be raised to ensure full payment of the interest charge. Both of these factors determine the rate needed to generate funds. If interest is not fully paid, Wisconsin could lose its federal funding to administer the unemployment insurance program. Further, employers could lose their federal unemployment tax credits, which currently total 5.4 percent of taxable wages.
Are other states implementing a Special Assessment for Interest?
Currently, there are 30 states with outstanding loan balances with the Federal Government that will need to raise money to pay interest. Failure to pay the interest by September 30, 2011, will expose the state to loss of federal grant funding to administer the UI program, as well as the loss of federal unemployment tax credits for employers, which are currently 5.4%.
How long has the Fund been negative, and why have we not had to pay interest prior to this?
The Trust Fund for Wisconsin was depleted in February 2009, during what was the worst national recession since the Great Depression. Wisconsin was one of many states that were required to borrow from the U.S. Treasury to pay for a record number of UI claims. The current Trust Fund loan balance is $1.3 billion.
The American Recovery and Reinvestment Act of 2009 (ARRA) waived interest due from February17, 2009 through December 31, 2010. Interest began to accrue on January 1, 2011.
When is this interest due?
The federal government requires the first interest payment to be made on or before September 30, 2011, and annual interest payments will be required on September 30 of each year until the loan is paid off.
When will I receive my bill and when will my payment be due?
Statements started mailing to affected Wisconsin employers on August 3, 2011. All notices should be in the mail no later than August 10, 2011. Payments will be due September 9, 2011. The Special Assessment for Interest includes instructions on payment options.
What if the payment is not made by the due date?
If your payment is not received by the due date specified on the Special Assessment for Interest statement, interest at a rate of 1% per month will begin to accrue on your outstanding balance.
How can I pay the Special Assessment for Interest?
The Special Assessment for interest can be paid electronically using our online internet reporting and payment system, ACH Credit, or by check. If paying by check, no penalty will be assessed if required to pay electronically.
I’ve never laid anyone off and or I know I have a positive reserve fund balance. Why am I being assessed?
As required by statute, the Special Assessment for Interest is a flat assessment for all employers subject to unemployment tax whose taxable payroll for calendar year 2010 was greater than $25,000. |
