Taxing Matters: SUI Rates Explained

State Unemployment Insurance (SUI) taxes are kind of a big deal.

States maintain a trust fund from which they pay unemployment compensation benefits to claimants. This trust fund comes from the unemployment compensation tax paid by employers on a quarterly basis. Every year, the states adjust the individual tax rates that employers pay based on the usage and solvency of the trust fund. This is announced in each state agency’s Contribution Rate Notice, the annual report showing the unemployment tax rate for the assigned period.

As a payroll service provider who handles all tax issues, you’d expect that we’d receive this notice. Unfortunately, you’d be wrong. And that’s because each state sends the notification directly to the employer address it has on file. We don’t get the original and, believe it or not, we don’t even get a copy.

Because of this, it’s extremely important that when you receive your Tax Rate Notices from various states, that you forward them to your payroll service provider. Doing so will help ensure that you are paying the correct amount of taxes due.

Failing to send your updated rates to Sentric (or your service provider) or sending them to us late may result in the following:

  • Your unemployment taxes may be underpaid, resulting in a penalty with interest
  • You may be issued a delinquent tax rates – a higher rate at which you must pay
  • Additional money – often in the form of a large sum – may be due at end of the quarter
  • You may find out that you’ve been overpaying money unnecessarily

As always, if you have questions on anything tax-related just check back here or contact your Sentric representative.

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