DLLR’s Division of Unemployment Insurance is offering a program to assist employers experiencing financial hardship with paying their quarterly unemployment insurance taxes for the first quarter of 2010, due April 30, 2010. A similar program will be offered for the second quarter obligations due on August 2, 2010.
The payment plan options are:
Plan 1:
- Quarterly Tax Return and Wage Report filed timely;
- 50% of Tax paid when the Quarterly return is filed;
- Remaining tax due is spread over three equal monthly installments, due on the last day of the next three months;
- Note that the last installment of this plan coincides with the due date of the next quarter, and unless another payment plan is in place, the reports and tax must be filed by the due date;
Plan 2:
- Quarterly Tax Return and Wage Report filed timely;
- Tax due is spread over 6 equal monthly installments, with the first installment due on the Quarterly due date;
- Note that this plan overlaps the due date of the next quarter, and unless another payment plan is in place, the reports and tax for the overlapped quarter must be filed and paid by the due date;
Plan 3:
- Quarterly Tax Return and Wage Report filed timely;
- Tax due is spread over 9 equal monthly installments, with the first installment due on the Quarterly due date;
- Note that this plan overlaps the due date of the next two quarters, and unless another payment plan is in place, the reports and tax for the overlapped quarters must be filed and paid by the due date;
Plan 4
- An individual plan as established with the Division of Unemployment Insurance.
For more information or to establish a payment plan for the first quarter obligations, contact the Skip Trace and Investigations Unit at (410) 767-2525, or email uitaxskip@dllr.state.md.us.
The 2010 Maryland General Assembly session ended at 12 a.m. this morning. During the 90-day session the Maryland Chamber took positions on 146 of the 2,700 bills introduced. You can view all of our bill positions here and access our legislative updates here.
Here are a few items of interest from the 2010 session:
Unemployment Insurance: The biggest issue of the session for most Maryland employers was the Administration’s unemployment insurance bill (SB 107). As introduced, the legislation would have liberalized several standards for granting unemployment insurance benefits in order for the state receive a one-time payment of $127 million in federal stimulus funds. While well-intentioned, the bill would have increased state borrowing from the federal government and increased long-term costs to employers. The Maryland Chamber stood united with other business organizations to insist on amendments to the bill that contained employer costs. The resulting compromise was enacted in a manner that will qualify the state for the federal funds, strengthen the long-term health of the unemployment insurance trust fund, reduce interest on late payments, and allow employers to use payment plans to extend unemployment insurance payments this year.
Budget: The state operating budget was again balanced through heavy reliance on fund shifts and borrowing from special funds, and federal stimulus funds. Significant downside risks continue, with an uncertain economic recovery, an anticipated further loss of over $1 billion in federal stimulus funds next year, and an ongoing gap between state spending and revenues of over $1.5 billion. This could lead to pressure for increased taxes, which we think would be ill-advised on top of the $1.3 billion of new taxes adopted in 2007. The new General Assembly will face major budget decisions.
Taxes: The General Assembly resisted efforts to adopt new taxes this session. The business community worked to defeat a number of tax proposals, including legislation to extend the duration of the 6.25 percent individual income tax bracket on high wage earners and legislation to implement a corporate income tax system of unitary combined reporting. We worked to achieve passage of legislation to extend the research and development tax credit and a bill to allow small businesses with real property tax bills of less than $50,000 to pay their taxes in semiannual installments, starting in 2011.
Workplace Regulation: There were a number of bills dealing with workplace regulation. We worked to defeat legislation that would have expanded Maryland employers’ obligations under the federal Family and Medical Leave Act, prohibited employers from using an applicant’s credit history when making hiring decisions, required employers to compensate employees for jury duty and more.
Stormwater Management: The Maryland Chamber and its business allies successfully advocated changes to the stormwater regulations set to take effect in May 2010. The emergency regulations will give developers more time to complete their projects before having to meet the new, stricter stormwater management rules. The compromise will “grandfather” some additional projects that were already in the planning pipeline and also give developers additional flexibility for redevelopment projects in designated growth areas.
To review our complete 2010 session recap here.
by guest on March 22, 2010
This is a guest post written for Maryland Chamber members by Ron Adler, President and CEO of Laurdan Associates and Chair of the Maryland Chamber Unemployement Insurance Subcommittee. For more information, contact Ronald Adler, president-CEO, Laurdan Associates, Inc. at (301) 299-4117 or radler@laurdan.com.
Maryland 2010 unemployment insurance (UI) taxes have gone up. The majority of Maryland employers have been assigned a 2010 tax rate of 2.2 percent — up from 0.6 percent in 2009; other employers in the state have been assigned tax rates ranging from 3.1 percent to 13.5 percent — up from 0.9 percent to 9.0 percent. These new tax rates (multiplied by the first $8,500 earned by each employee) translate into a per employee tax liability of $187 for minimum rated employers — up from $51; and per employee tax liabilities of between $263.50 and $1,147.50 for non-minimum rated employers.
As Maryland employers prepare to pay their 2010 UI taxes, many are finding it is valuable to assess the effectiveness of their UI cost management in light of the five steps of UI cost control.
Five Steps of Unemployment Insurance Cost Control
Step #1: Review and verify your 2010 UI tax rate. The state sometimes makes a mistake. You may have filed an amended return or you may have received relief from charges that was not recorded. If you find an error, you have 15 days from the “Date of Notice” shown on your tax rate notice (DLLR/UI 61) to appeal your 2010 tax rate.
Step #2: Ensure your classifications of employee/independent contractor status are correct. It is not unusual for an individual you classified as an independent contractor to file a claim for UI benefits. Since you reported no wages for this individual, this single act can trigger a UI Agency audit of your UI reporting, and potentially more threatening, a full-blown IRS wage and hour audit. Remember for UI purposes, Maryland uses the A-B-C test to determine employee/independent contractor status. That is, unless specifically exempt, an individual is an “employee” if he/she: (A) is not free from direction and control of your organization; (B) is not customarily engaged in an independent business or occupation; AND (C) does not perform work that is outside of your usual course of business or outside your place of business. In light of the changes and restructuring your organization may have made as a result of the recession, it would be prudent to review the work being performed by and the relationship you have with individuals classified as “independent contractors” to ensure your have properly classified them.
Step #3: Ensure your have properly reported wages. Remember: (1) not all payments are included in the definition of wages under Maryland’s UI laws; (2) Maryland’s taxable wage base is defined as the first $8,500 earned by each employee in a calendar year – you should not pay UI taxes on earnings above the $8,500 taxable wage base: and (3) for employees working in more than one state, ensure you have reported wages to the right state – where you report matters.
Step #4: Protect your experience rated account. UI benefits charged against your account affect your UI tax rate and liability. (1) Ensure that all UI claims forms are properly completed and returned timely. (2) Review all local office determinations carefully. If you disagree with the findings; appeal. (3) Review all hearing examiner decisions carefully. If you disagree with the findings; appeal. (4) Review all benefit charge statements to ensure your account was properly charged for benefits. If you find errors, appeal.
Step #5: Assess your human resource management activities. The effectiveness of your hiring practices, performance management systems, employment policies, employee communications, and discipline and termination processes significantly affects your ability to control UI benefit charges. You should review all termination, claims, decisions, and benefit charges periodically to identify and track: (1) the reasons for separations, (2) the number of protestable and non-protestable claims, (3) your success in receiving correct separation-related determinations and decisions, and (4) the numbers UI claims that are precursors for other types of employment claims, such discrimination or wrongful discharge.
Finally, one of the goals of the unemployment insurance program is to encourage employment stabilization. This goal is accomplished by experience rating the organization. Organizations with higher turnover have higher UI tax rates and liability. At the enterprise level, most organizations allocate UI costs as a percent of payroll. However, in larger organizations, their various divisions, locations, profit centers, and supervisors have different internal experience with turnover and separations. In these organizations, the use of internalized experience rating can be an effective tool in more effectively allocating UI tax liabilities and more effectively holding manager accountable for their individual performance.
For more information, contact Ronald Adler, president-CEO, Laurdan Associates, Inc. at (301) 299-4117 or radler@laurdan.com.
The Maryland Chamber’s Legislative Committee voted this afternoon to support an amended version of the unemployment insurance bill (SB 107). The committee took action after reviewing a draft of the amended bill and meeting with Senate Finance Committee Chairman Thomas McLain (Mac) Middleton (D-Dist. 28) and Senate Minority Leader Alan H. Kittleman (R-Dist. 9), a member of the Finance Committee.
“We thank the Finance Committee, the Unemployment Insurance Oversight Committee and representatives from the administration for working to address our concerns,” Maryland Chamber President/CEO Kathy Snyder, CCE said. “Our goals have been to give employers payment plan options, offset the cost of any unemployment insurance system changes and ensure the long-term health and stability of the unemployment insurance trust fund. This bill accomplishes those goals.”
Senator Middleton said the Finance Committee could vote on the amended bill as early as Tuesday afternoon, March 2.
The bill was amended to address a number of the Maryland Chamber’s concerns:
Payment Plans & Reduced Interest Rate: Since its introduction the Maryland Chamber has strongly supported the provision to provide payment plans and reduced interest rates. The payment plans will help Maryland employers spread the cost of increased unemployment insurance taxes over the course of the year. Unemployment insurance taxes are calculated based on the first $8,500 of taxable wages. Without this option, the weight of the unemployment insurance tax increase will hit many businesses especially hard at the end of the first quarter.
Long-Term Cost: As introduced, the bill would adopt a number of changes to the unemployment insurance system to make the state eligible for $126.8 million of federal stimulus funds. The changes would result in approximately $18.4 million to $19.4 million of additional benefits per year. The amended bill includes an estimated $18.2 million to $19.5 million in annual benefit reductions to offset the cost of the increases.
Stability of the UI Trust Fund: The amended bill also keeps the rate schedule at table F, rather than moving to table E. The original bill used much of the federal stimulus funds to provide employers with a small one-year rate deferral. While deferring a small portion of the unemployment insurance tax increase may sound appealing, the Chamber believes it would weaken the unemployment insurance system and cause Maryland employers to pay higher rates for a longer period of time. Staying at Table F and dedicating the federal dollars to the trust fund will help rebuild the trust fund faster, which is an important step to reducing unemployment insurance tax rates for all Maryland employers.
