Unemployment Assessments Mailed to Businesses
Connecticut businesses can expect a bill from the state’s Department of Labor this week, as the effects of the economic recession continue to linger.
To meet interest payments on federal unemployment compensation loans, the state is charging employers a special assessment of $1.70 per worker for each $1,000 in taxable income, capped at $25.50 per employee.
That’s in addition to the quarterly unemployment taxes employers already pay on the first $15,000 of an employee’s wages.
Connecticut’s Unemployment Compensation Trust Fund is funded entirely by the state’s employers, who also face increases in their federal unemployment taxes when they file their 2011 tax returns next January.
Employers with at least one full year of taxable payroll will receive an assessment, although certain non-profits and self-insured employers, such as municipalities, are excluded.
The new charges are effective August 1, with payment due within 30 days. Penalties accrue after 60 days.
Labor Commissioner Glenn Marshall expects the special assessment to remain in place for several years, until the state pays out an estimated $130 million in interest payments to the federal government.
With almost 120,000 people out of work at the height of the economic downturn, the state’s unemployment insurance fund became insolvent in October, 2009.
To continue paying unemployment benefits, the state borrowed an estimated $810 million from the federal government. With the unemployment rate locked at 9.1 percent, the state likely will end up borrowing more than $1 billion.
The federal government waived interest payments on those loans until December 2010. Connecticut was one of 33 states that borrowed money to meet its unemployment benefit obligations.
The state sends about 120,000 unemployment benefit payments, totalling $36 million, each week.
Legislative efforts to double the size of the fund’s reserve died during this past General Assembly session.
The agency posted a detailed set of questions and answers about the special assessment at its website.
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