You may have already received information related to 2 retroactive changes that have been passed into law in the past few weeks that relate to Tennessee Insurance (“SUTA”). I wanted to explain the changes to you and let you know about the process for retro-paying the additional insurance(“tax”) that is being imposed.
First the TN Department of Labor and Workforce Development has imposed a retroactive rate increase across the board of .6%. You will receive a notice of determination from the state that will look like your 1st qtr return was done incorrectly...that was not the case, they have retroactively applied this tax and it is now a different rate than was originally imposed at the time of filing. There will be verbage on the notice explaining the resulting amount you now owe.
Secondly and this one is a little trickier, in that it also directly affects every employer retroactively but will be imposed on your 2nd qtr TN Unemployment return. The overall wage base will increase from $7000 to $9000 for every employee. What this means is that usually only the first $7000 of wages paid to each employee is subject to TN unemployment insurance. For a company at the default rate of 2.7% this works out to $189.00 per year per employee. If the employee was paid more than $7000 in the first quarter only the 1st $7000 was “taxed” and the overage was exempt from the 2.7% insurance/tax rate.
Now, every employee’s wage base will increase to $9000. Any previously exempt amounts will now become a part of your new rate (or in other words your normal rate + .6%). So if your default rate was 2.7% it is now 2.7%+.6% on the whole $9000 which equates to $297 per employee. This effectively is a 57% insurance rate increase. If you have 10 employees the additional cost is $1080 per year, ouch!
With all of this being said, if we handle your payroll feel rest assured that it will be calculated going forward correctly. You will still receive a bill from the TN Dept of Labor for the first qtr rate increase. When you receive the notice, you should fax us a copy and then unfortunately cut a check to the addressed envelope included.
If we handle the payment and filing of your payroll taxes and payroll filings you will be receiving a notice from us of the uncollected state unemployment to date. We will let you know when we will be collecting the additional previously uncollected liability in order to timely remit it to the TN Department of Labor.
If all of this makes your head swim....feel rest assured it does ours too....but we have it all figured out.....
In the mean time please feel free to contact us if you are still confused or are now more confused than ever.
Also here is a link to the notice as provided by the TN Dept of Labor http://www.tennessee.gov/labor-wfd/Employers/2009_UI_LegislationLetter.pdf
