Like it or not, tax time is here. That means for employers across the country, they’re receiving their unemployment insurance (UI) tax rate notices. And with that often comes what can be referred to as “UI Tax Rate Sticker Shock,” which serve as a stark reminder that UI taxes are one of the largest employer tax expenditures out there.
For many employers,unemployment taxes have become the second highest employer tax rate, right behind FICA. For that reason, we’re giving you some of our best tips on auditing your state UI tax notice so that you can mitigate those costs as much as possible.
Tips for an effective UI tax rate audit
For starters, you want to compare the numbers to calculate your rate. There will be times when the state UI agency accidentally uses incorrect numbers. These numbers will then affect how your tax rate is calculated. If you’re tracking benefit charges and/or credits, then you should compare the state UI agency’s numbers to yours in the following areas:
- Taxable Wages
- Total Wages
- Net Benefit Charges (claim charges to your account, minus claim credits)
Also, make sure to check the math of the state UI agency. There are times when a glitch in their systems triggers an error in calculation. People who have worked in the UI field for years can verify that this does, in fact, happen.
Next, look for voluntary payment opportunities. Many states now allow employers to “pay down” their UI tax rate, which can sometimes result in significant savings. In one case, a company paid $8,000 in voluntary taxes which resulted in a total savings of $66,000. So, while paying taxes “voluntarily” might make you cringe, it might save quite a bit of money in the long run.
Finally, seek help if you don’t know how to interpret, and audit, your UI tax rate notice. There is a bevy of accountings, firms, companies, and professionals that can assist you. If you have any doubts or confusion, it’s better to be safe than sorry and move forward by contacting a pro.
When working to lower or maintain your current UI costs, you should be checking everything to do with unemployment – including your UI tax rate notices. Errors happen, but if you are diligent about auditing and protesting the results where needed, you stand a much better chance of lowering your UI costs. For more information visit us on the web atwww.unemploymenttracker.com.