Tax Rate Calculations/ Unemployment Benefit Charges “Strategies for Maximizing Business Opportunities” Employer Conference Oct 12, 2011

New Employer Tax Rates  Assigned new employer 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 calendar years)  If acquiring an existing business - Assigned predecessor tax rate unless transfer of experience waived (Must be waived within 60 days of the date of acquisition)  Out-of-State Building/Highway Contractors - Assigned maximum tax rate

Employer Experience Rating  Benefit Ratio: Based on employer’s experience consisting over last 4 completed fiscal years (July 1 through June 30)  Charges for benefits paid are divided by employer’s state unemployment taxable payroll for that period  Benefit ratio converted to percentage form and applied to experience rating tax table to create Base Tax Rate

Unemployment Benefit Charges  For Tax Paying Employers: Charge claimant’s last 30 working day/240 hour employer  Work days do not have to be consecutive  Disputed claims - respond timely to all inquiries by VEC staff to ensure effective participation in the adjudication process  Charged employer receives quarterly charge statement identifying claimants and benefit amounts paid to them

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  Mailed in December notifying employer of tax rate for upcoming calendar year  Reflects state unemployment taxable payroll and unemployment benefits paid for last four fiscal years (July 1 through June 30) used to calculate Base Tax Rate. Also includes Pool Cost Charge and Fund Building Charge info Tax Rate = Base Tax Rate + Pool Cost Charge + Fund Building Charge Tax Rate = Base Tax Rate + Pool Cost Charge + Fund Building Charge  Tax Rates normally assigned by calendar year

VEC Tax Rate Information New Employer Assigned Rate 3.17%2.98%2.58%2.52% Minimum Computed Rate 0.77%0.58%0.18%0.12% Maximum Computed Rate 6.87%6.68%6.28%6.22% Pool Cost Charge 0.47%0.28%0.08%0.02% Fund Bldg Charge 0.20%0.20%n/an/a

Average Tax Per Employee State Comparisons

Average Tax Rate Comparisons

Pool Charge Projections

Trust Fund Solvency Projections

Maximum Weekly Benefit Amounts

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

Claimant’s Base Period of Employment

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 4 th qtr Enrollment and Secure filing:

Resources See for the following: See 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 Employers’ Handbook  FAQs - Employer UI Tax Questions  FAQs - Unemployment Benefits  Virginia Unemployment Compensation Act

Additional Information  Try iFile or Web Upload for a new and improved way to file your VEC and Department of Taxation information:  Thank you for using the services of the Virginia Employment Commission