2021 tax rate notices have been postponed
If you are a taxpaying employer, we normally send you a tax rate determination in the mail every December. We also post that tax rate determination in your online account.
Unfortunately, due to a variety of challenges created by the COVID-19 pandemic, your 2021 tax rate determination has been postponed. This delay was formally authorized by Executive Order 20-102.
Reasons for delay
There are approximately 140,000 employers in Minnesota that pay UI taxes.
Every year, we calculate each taxpaying employer’s individual “experience rating” by dividing the total amount of benefits charged over the last four years by the total taxable wages for the same period. This is a big effort every year, but it is usually not very complicated.
Because of circumstances associated with the pandemic, it has been unusually difficult to accurately calculate your experience rating this year.
Completeness of wage records
The unprecedented number of claims filed by unemployed workers – over 1,000,000 so far, compared to about 155,000 last year – has meant that all our resources have been focused on helping applicants. Because we have been focused on helping applicants, we are uncertain whether all employers have been able to complete their quarterly wage detail submissions. Without complete wage detail submissions, we cannot accurately calculate experience ratings.
Pending chargeability issues
The unprecedented number of claims also meant an unprecedented number of eligibility issues for our staff to review. We have prioritized eligibility issues that directly affect an applicant’s eligibility to receive benefit payments. We have not yet been able to resolve eligibility issues that only affect the chargeability of benefits to an employer account.
Federal reimbursement of the first week of benefits
The first week an applicant is eligible for unemployment benefits is called the nonpayable week or the “waiting week”. Applicants usually do not receive a UI payment for this week. Given the circumstances created by the pandemic, Minnesota and many other states chose to pay unemployment benefits during the waiting week.
The federal government has agreed to reimburse states for the cost of “paid waiting weeks”. Under state law, we do not charge your employer account for unemployment benefits that have been reimbursed by the federal government.
There has never been federal reimbursement for a single week of benefits, which means that this relief has been challenging to implement. Our accounting systems have functionality to relieve charges for an applicant’s entire benefit account, but we have never had to adjust charges for a single specific week (while making no adjustments to charges for other weeks of benefits).
Federal reimbursement of Shared Work benefits
The federal government has also agreed to reimburse states for the cost of benefits paid under the Shared Work program. The federal government has never reimbursed states for Shared Work benefits, so our accounting systems need to be adjusted to implement this relief.
State relief of charges
In addition to federal relief, Governor Walz and the Minnesota Legislature have ordered that you will not be “charged” for any unemployment benefits paid as a result of COVID-19. The state has never relieved employer charges specifically for pandemic-related claims, so our accounting systems need to be adjusted to implement this relief as well.
The financial relief provided by Congress, the Governor, and the Minnesota Legislature will help defray some of the costs of the pandemic, but they also require complex system changes at a time when our resources are stretched thin. By taking a little more time to test/review our work, we can ensure that your tax rate is as accurate as possible. We take this work very seriously. Issuing inaccurate tax rates – whether too high or too low – is simply unacceptable.
We know that postponing the tax rate notification will create some uncertainty for your business. We can assure you that we are working hard to issue a tax rate determination as soon as possible. We expect to send your 2021 tax rate determination in late January.
We also need to be frank that, if Congress passes any new unemployment benefit programs in the coming weeks, we may need to shift resources again. Because the situation is dynamic, we ask that you monitor our website and your account before contacting us about the status of particular benefit charges. We will also send you letters in the mail with any major updates.