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Businesses May Benefit from the Minnesota Unemployment Insurance Law Changes passed in 2010

In 2010, Minnesota changed unemployment insurance by amending the Tax Rate Buydown provision removing the surcharge of 25% for the calendar years 2011 through 2013.  Some businesses may benefit substantially by the elimination of the 25% surcharge.  If your business is assigned an experience rate and benefits have been paid to former employees during the experience rating period you are eligible to make a buydown payment.  Businesses that are eligible, have funds available to make a buydown payment and anticipate future growth ideal candidates to take advantage of this law change.

A buydown payment must be made electronically and must be received within 120 days from the beginning of the calendar year for which the tax rate is effective. 

Will your business benefit from making a Tax Rate Buydown for 2011?  You should consider the cost of making a buydown payment to get a reduced tax rate compared to paying tax at the assigned rate to make this decision.  Once you receive your experience rate (expected in October/November) you can make these calculations.  To do this:

First, add together the cost of the buydown payment (benefits to be canceled w/o the surcharge) plus the amount of the tax you would pay on your estimated total taxable payroll for the current year at the lower rate that would result from the buydown payment.

Then, compare this total with the tax you would pay on your estimated taxable payroll for the current year at the original assigned rate.

You can get help with these calculations by visiting the Minnesota Unemployment Insurance website at www.uimn.org.  The Forecast Tax Calculator is available under the Tax and Wage Detail Reporting section and the Process Tax Rate Buydown is available under the Account Maintenance section of the website. 

Since your buydown payment can be total or partial, you may want to run several “what if” scenarios to determine the best outcome for your situation.

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