VIRGINIA EMPLOYMENTCOMMISSION

Tax Rates and Benefit Charges

Types Of New Employer Tax Rates

• New employers assigned Base Tax Rate (2.5%), plus Pool Cost Charge and Fund Building Charge. (New employer rate varies each year based on Trust Fund factors. Assigned for 2 - 3 calendar years)

• If acquiring an existing business – Successor assigned Predecessor tax rate unless transfer of experience waived (Must be waived within 60 days of the date of acquisition….not notification.)

• Out-of-State Building/Highway Contractors - Assigned maximum tax rate.

Experience Rating After your New Employer Rate

• Based on employer’s experience consisting of up to last 4 completed fiscal years (July 1 through June 30)

• Charges for benefits paid are divided by employer’s SUTA paid taxable payroll for that period to create benefit ratio.

• Benefit ratio converted to percentage form and applied to experience rating tax table to create Base Tax Rate

Additional Tax Rate Costs

• Pool Cost Charge: Compensates for charges that cannot be assigned to any specific employer (out-of-business, not-covered, higher than max rate, etc)

• Fund Building Charge (.2%): Imposed when the trust fund balance does not exceed 50% solvency

Tax Rate Notice

• Generally mailed in November notifying employer of tax rate for upcoming calendar year

• Reflects unemployment paid taxable payroll and unemployment benefits paid for last four fiscal years

• Tax Rates normally assigned by calendar year

• Tax Rate = Base Tax Rate + Pool Cost Charge + Fund Building Charge

Unemployment Benefit Charges

• Quarterly charge statements are sent to employers identifying claimants and benefit amounts paid

• For SUTA TAX Paying Employers: Charge claimant’s last 30 working day/240 hour employer

• Work days do not have to be consecutive

• Disputed claims – Employers should respond timely to all inquiries by VEC staff to ensure effective participation in the adjudication process

VEC Tax Rate Information

2012 2011 2010 2009 2008New Employer Assigned

Rate3.23% 3.17% 2.98% 2.58% 2.52%

Minimum Computed Rate 0.83% 0.77% 0.58% 0.18% 0.12%

Maximum Computed Rate 6.93% 6.87% 6.68% 6.28% 6.22%

Pool Cost Charge 0.53% 0.47% 0.28% 0.08% 0.02%

Fund Bldg Charge 0.20% 0.20% 0.20% n/a n/a

Average Tax Per EmployeeState Comparisons

Reimbursable (Self-Insured)

Employers• All state agencies, many political subdivisions,

and many 501c3 non-profit organizations

• Do not pay quarter taxes like tax-paying employers, but still file quarterly.

• Pay quarterly bill pro-rated based on employer’s reported wage amounts in claimant’s base period.

Reimbursable Accounts Unique Features

• May not be separating employer but gets charge due to claimant’s base period wages

(or alternate base period)

• Pays dollar-for-dollar to reimburse Trust Fund for benefits paid on pro-rated basis

• If claimant is later disqualified, employer remains responsible for bill until over-payment is recovered from claimant

New Information for 2011

• FUTA - Due to outstanding loans SUTA tax credit is reduced by .3% (5.4% to 5.1%)

• FUTA - Effective 7/1/2011 gross FUTA tax is reduced from 6.2% to 6%

• Effective November 1, 2011, VEC will no longer accept magnetic media for filing quarterly tax reports

• Employers with over 100 employees - must submit payroll by either iFile or Web Upload for 4th qtr. 2011

Resources See www.vec.virginia.gov for the following:

• The VEC office serving your area

• For state UI Tax information - ask to speak to a tax rep

• For Benefits information - ask to speak to a supervisor or manager

• Virginia Unemployment Compensation Act• Virginia Employers’ Handbook

• FAQs - Employer UI Tax Questions

• FAQs - Unemployment Benefits

Additional Information

• Try iFile or Web Upload for a new and improved way to file your VEC and Department of Taxation information:

Questions?