Unemployment Insurance Tax - Employer Updates
UI Information Exchange - SIDES and SIDES E-Response
(posted September 28, 2012)
A new State Information Data Exchange System (SIDES) and SIDES E-Response offer employers and third-party administrators (TPA) - free of charge - secure, electronic and standardized format to supply the information needed for responding to unemployment insurance (UI) benefit claim notices/information requests rather than by U.S. Postal Service mail.
SIDES and SIDES E-Response give employers an easy and efficient way to respond to UI information requests, saving time and money by:
- Eliminating mail delivery allowing more time to gather information and respond timely.
- Ensuring complete information is provided the first time reducing the need for phone calls.
- Reducing paper handling, staff time and postage costs.
SIDES E-Response is a website through which employers and TPAs submit electronic responses to UI information requests. SIDES provides a more automated data-sharing and file-tracking interface between employers’ IT systems and state agency networks. SIDES is especially helpful to those who typically deal with a large volume of UI information and operate in multiple states. For more information on these two options, view a SIDES and SIDES E-Response Comparison Table.
For additional information on the SIDES computer-to-computer interface system, including how to sign up for it, view the SIDES Introductory Guide.
To participate in the SIDES E-Response system, complete and submit the registration form. Once your registration is approved, all Notice of Claim information will be emailed to you at the address you provided on your registration form. A Personal Identification Number (PIN) and the website address for accessing the SIDES E-Response website will be provided in each e-mail notification. If you change your e-mail address or decide you no longer wish to participate, contact contact the UI Tax Division at 605.626.2312; press 1 after you hear the automated greeting.
For more information:
Additional information on SIDES and SIDES E-Response
Important Federal Law Change (posted December 28, 2011)
Effective January 16, 2012, employers will be required to include an employee's date of hire when submitting a new hire report. The date of hire is the date an employee first performed services for pay. This requirement was enacted in Section 802 of the Claims Resolution Act of 2010 (CRA; Pub. L. No. 111-291) signed into law by President Obama on December 8, 2010.
The South Dakota New Hire Reporting Center currently accepts and processes the date of hire when it is included on new hire reports. Employers must submit rehires with the most recent date of hire.
2011 Legislative Update (posted March 22, 2011)
Senate Bill 64 applies to employers that have a steadily increasing negative balance in their unemployment insurance account. The interest payments will still be deposited in the State UI Trust Fund as they have been in the past, but will now also be treated like the quarterly contribution and be credited to the UI account of the paying employer.
Senate Bill 86 reduces the maximum investment fee rate from 0.55 percent (fifty-five hundredths percent) to 0.53 percent (fifty-three hundredths percent) and is effective immediately. The reduction is available to experience rated employers in operation three years or longer.
Senate Bill 125 changes the account balance date and payroll period ending date used in the rate calculation from the current December 31 to June 30. Your rate will be based on your account status as of June 30 immediately preceding the year for which the rate is assigned. Contribution payments made in July will be included in the balance. As a result, you will receive future rate notices before the calendar year starts, rather than after it starts as is now the case. The Department anticipates the rate notices for 2012 will be provided to employers no later than November 2011.
See current tax rates and wage base.
Previous Employer Updates:
No Employer Surcharge for Fourth Quarter 2010 or First Quarter 2011 - posted October 5, 2010
Important notice regarding the Employer Identification Number (EIN) - posted August 3, 2010
Employer Surcharge Remains in Effect for Third Quarter 2010 - posted July 19, 2010
Employer Surcharge Effective for Second Quarter 2010 - posted March 31, 2010
Change in wage base and contribution rate; reduced employer surcharge - posted March 17, 2010
Surcharge notice for employers - originally posted September 15, 2009, updated October 8, 2009
Interest on negative UI account balances - posted November 3, 2008
Changes in taxable wage base - posted July 2006
Employer payments to qualified pension plans - posted February 28, 2006
No Employer Surcharge for Fourth Quarter 2010 or First Quarter 2011
An employer surcharge is not in effect for the Fourth Quarter 2010, October 1 through December 31, because the UI Trust fund on September 30 was $27.7 million. The surcharge comes off when the fund exceeds $16.5 million at the end of a quarter.
The surcharge automatically goes into effect when the UI Trust Fund balance is below $11 million at the end of any quarter. The Department of Labor predicts the Trust Fund balance will be $25 million on December 31, so there will also be no surcharge for the first quarter in 2011.
Employers who have questions about their account are encouraged to contact the Unemployment Insurance Division at 605.626.2312. (posted October 5, 2010)
Important notice regarding the Employer Identification Number (EIN)
(Posted August 3, 2010) The Internal Revenue Service revised Form SS-4, Application for Employer Identification Number (EIN), to clearly identify the applicant's true owner. Effective January 2010, all mail, fax, phone and electronic EIN applications must disclose the name and taxpayer identification number of the true "responsible party" for the entity requesting an EIN. For more information, visit the IRS website. (Posted August 3, 2010)
Employer Surcharge Remains in Effect for Third Quarter 2010
(Posted July 19, 2010) The employer surcharge continues to remain in effect for the Third Quarter 2010, July 1 through September 30, at the minimum 2010 rate of 0.1 percent. The surcharge will appear when quarterly unemployment reports are filed, either on a paper form or by Internet. DOL is projecting the surcharge will come off Fourth Quarter 2010.
Employer Surcharge Effective for Second Quarter 2010
(Posted March 31, 2010) An unemployment insurance surcharge to employers will remain in effect for the second quarter of 2010, April 1 through June 30, at the maximum 2010 rate of one percent. The surcharge will appear when employers file their quarterly unemployment report, either online or in paper format. The surcharge is a permanent part of South Dakota law; it automatically goes into effect when the UI Trust Fund balance is below $11 million at the end of any quarter. The Trust Fund balance on March 31, 2010 was a negative $22.8 million, thus the continued surcharge. Employers who have questions about their account are encouraged to contact the Unemployment Insurance Division at 605.626.2312.
Change in wage base and contribution rate; reduced employer surcharge
(Posted March 17, 2010) During the 2010 Legislative Session, Senate Bill (SB) 186: An Act to change the unemployment insurance wage base and contribution rates and to declare an emergency, was passed and immediately signed into law. View or print the complete summary (in Adobe .pdf format*).
The Bill increased the contribution rates for employers who frequently use the unemployment insurance (UI) system and requires employers have more in reserve for the various rates. View or print the 2010 UI Contribution and Investment Fee Rate Notice (in Adobe .pdf format*). The 2010 rate notices were mailed to employers on March 16, 2010.
Another significant change as a result of SB186 is a reduction in the 1.5 percent surcharge assessed to all employers effective October 31, 2009. The surcharge has been a part of South Dakota law since 1939 and triggers on when the Trust Fund has a low or negative balance.
The surcharge was projected to be at 1.5 percent, or a maximum of $150 per worker, in 2010 and 2011. SB186 reduced it to a maximum of 1.0 percent, or $100 per employee, in 2010 and a maximum of 0.75 percent, or $82.50 per worker, in 2011.
Please note the surcharge at the 1.0 percent rate is in effect for the first two quarters of 2010. Employers will be notified of the surcharge rate in effect for future quarters.
Finally, employers may reduce their contribution rate by making an advance voluntary payment to their account by March 31, 2010. This buy-down option is available to all employers who are experience rated after being in business three years or more.
If you have questions about your account, please do not hesitate to contact the UI Division at 605.626.2312.
Surcharge notice for employers
(Originally posted September 15, 2009, updated October 8, 2009) The South Dakota Unemployment Insurance (UI) Trust Fund has been severely impacted by the recession. Weekly payments to unemployed workers from the Trust Fund have been two to five times higher than normal.
A permanent provision in South Dakota law automatically assesses a surcharge to employers when the State Unemployment Insurance Trust Fund falls to low levels. The South Dakota surcharge is codified in SDCL 61-5-23 and has been part of unemployment insurance law since 1939.
The trigger point for the surcharge is $11 million at the end of any quarter. The surcharge rate depends on the actual Trust Fund balance at the end of any quarter.
The Trust Fund balance was $2.8 million on September 30, 2009. That balance triggered a surcharge of 1.5 percent on taxable wages paid from October 1 through December 31, 2009. This 1.5 percent is in addition to the regular unemployment contribution owed by the employer. The surcharge payment is deposited in the State Trust Fund, but does not credit to the employer's unemployment account balance.
The taxable wage base in 2009 is $9,500. The surcharge impact on individual employers will be determined by the number of employees and how much in taxable wages they are paid.
For example, if all a firm's employees were paid $9,500 or more by September 30, 2009, the employer would have no surcharge due for the fourth quarter 2009. If a new employee started work on October 1, 2009 or after, the 1.5 percent surcharge would apply to wages paid to that employee (up to $9,500) paid through December 31, 2009. The actual payment for the surcharge on fourth quarter 2009 wages will be due on January 31, 2010. The maximum amount any business would pay per employee in 2009 would be $142.50. See example.
Government and non-profit entities have the option to be "reimbursing" employers. They pay no quarterly unemployment contributions but self-insure their costs and are billed for the actual cost of any claims. Employers in this reimbursable status do not pay the surcharge.
The surcharge is projected to remain in effect at the 1.5 percent rate through June 30, 2010 because the Trust Fund will have a negative balance on December 31, 2009 and on March 31, 2010.
The taxable wage base is $10,000 for 2010, and the surcharge will apply to wages paid up to that amount. Surcharge payments for the quarter ending March 31 will be due April 30. Payments for the June 30 quarter will be due July 31. See example.
Employers were notified in early October the surcharge of 1.5 percent would be in effect for taxable wages paid from October 1 through December 31, 2009. Employers will receive specific information from the Department of Labor as soon as the exact surcharge rates and time periods are known for 2010. The maximum amount any business would pay per employee in 2010 would be $150.
Interest on negative UI account balances
(Posted November 3, 2008) Starting in 2009, employers with an experience rating account which has a negative balance may be assessed interest on the negative balance.
Background
In 2006, the South Dakota Legislature adopted a comprehensive package to put the South Dakota Unemployment Insurance Trust Fund on a path to improved solvency. One of the pieces was an assessment of interest on experience-rating accounts that have maintained a negative balance.
The South Dakota Unemployment Insurance Trust Fund is held
by the U.S. Treasury, where it earns interest. In 2007 the average
interest earned was 4.82 percent. The South Dakota Legislature
decided that employers whose experience-rating account
balances were negative and had become more negative
compared to the balances as of December 31, 2006 will be
charged interest equivalent to the interest rate earned by the
Trust Fund.
Details
For those employers whose experience-rating account has had a negative balance at the end of each quarter for the last two calendar years and whose balance is more negative now than it was as of December 31, 2006, their account will be assessed interest at a rate equal to the rate the U.S. Treasury pays on the Trust Fund. During March of each year, those employers will receive notice of interest due. The interest is payable in four equal payments due on the last day of each quarter. This interest payment is not credited to your Unemployment Insurance Experience-Rating Account. Negative account balances prior to December 31, 2006 will be not charged.
Example
If your account balance at rating time for the 2009 tax rates is a negative $2000 and if your account balance on December 31, 2006, was a negative $1000, you will pay interest on the $1000 difference. The average 2008 interest rate earned by the Trust Fund (4.78 percent) times $1000 equals $47.80. Rate schedules for employers who maintain a positive account balance will not change.
(Posted July 2006) The following is a summary of unemployment insurance changes passed by the 2006 Legislature in House Bill 1027 affecting the taxable wage base through 2010 and beyond.
The balance in the state UI trust fund has been dropping since 2000 because benefit levels are tied to wage inflation and the benefit levels increase each year. Trust fund income does not have an automatic inflation factor, and therefore income has remained stagnant.
The purpose of this bill was to restore solvency to the trust fund by requiring additional payments from employers who use the UI system. It was also to correct the system's structural imbalance caused when benefits increase and revenue remains constant. Changes were delayed until 2007 so employers could better prepare for them.
The taxable wage base had been frozen at $7,000 since 1983. Taxable wage base changes are as follows:
$ 8,500 in 2007
$ 9,000 in 2008
$ 9,500 in 2009
$10,000 in 2010
The maximum UI contribution rate increased from 7.0 percent to 8.5 percent.
Some employers have negative UI account balances because their workers have received more in benefit payments than the employer has paid in UI tax contributions. Contribution rates for these negative account balance employers will increase. The increase will range from 0.3 percent to 1.5 percent, depending on the employer's past claim rates.
In 2009 employers will be charged interest each year if their UI account has been negative for two consecutive years. Negative account balances prior to December 31, 2006 will be grandfathered and interest charged only on the amount that the negative balance increased after December 31, 2006.
Rate schedules for employers who maintain a positive account balance will not change
Law Change Regarding Employer Payments to Qualified Pension Plans
(Posted February 28, 2006) The 2006 South Dakota legislature passed Senate Bill 108 which changes the unemployment insurance tax status of employer payments to qualified IRS retirement plans. The change affects payments to plans provided in sections 401(k), 403(b), 408(k), 408(p) and 457 of the Internal Revenue Code.
Beginning July 1, 2006, employer payments to these plans are not considered "wages." The payments should no longer be included on the Quarterly Contribution, Investment Fee and Wage Report, beginning with your report for the quarter ending September 30, 2006.
If you have questions, please contact the Unemployment Insurance Tax Unit at 605.626.2312. The applicable law section (in part) follows:
61-1-48 (formerly 61-1-32). As used in this title, the term, wages, does not include the amount of any payment with respect to services performed on behalf of any person in its employ under a plan or system established by an employing unit which makes provision for persons in its employ generally or for a class or classes of persons including any amount paid by an employing unit for insurance on annuities, or into a fund, to provide for any payment on account of:
(4) Retirement or pension if the payment is made pursuant to a qualified plan as provided in 26 U.S.C. 401(k), 403b, 408(k), 408(p) and 457 as of January 1, 2006.
**If you are unsure of the type of retirement plan held by your company, please contact your Plan Provider for verification.
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Pierre, SD 57501-2291
Tel. 605.773.3101
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