July 26, 2011

New York State Department of Labor Interest Assessment Surcharge

Related Service Tax & Business

New York State Department of Labor Interest Assessment Surcharge Tax & Business

The recent recession have led to record numbers of unemployed workers receiving unemployment insurance benefits. As a result, New York State had to borrow over $3 billion from the Federal Unemployment Insurance Trust Fund. Under previous legislation, the federal government had provided interest-free loans to the NYS Unemployment Trust Fund. Because Congress has not extended the interest free loan provisions into 2011, New York must now pay approximately $95 million in interest on these loans to the federal government.

In order to pay the interest on these federal loans, New York State is assessing a temporary charge on employers, called an Interest Assessment Surcharge (“IAS”). Should Congress extend the interest-free loan provision, the New York State Department of Labor will either credit the employer account or refund the money paid.

The amount of the interest assessment surcharge rate is .25%. The surcharge applicable to each employer is determined by multiplying the total New York State Unemployment taxable wages for the period of October 1, 2009 through September 30, 2010 by the .25% surcharge rate. The maximum amount that most employers will be assessed is $21.25 per employee ($8,500 maximum taxable wages times 0.25%.)

The New York State Department of Labor will be forwarding employers notification indicating the surcharge due. The payment of the interest assessment surcharge is due by August 15, 2011.

For further information on this matter, employers can contact the Employer Accounts Adjustment Section of the NYS Unemployment Division at 1-888-899-8810.

Should you have any questions related to this Tax Flash, contact your Marcum LLP tax professional.