NEW YORK .25% INTEREST ASSESSMENT SURCHARGE
August 24, 2011
As a result of the downturn in the economy, as many as 30 states have exhausted their unemployment benefit funds and have had to borrow money from the Federal government to cover the gap between rising payments for benefits and declining payroll tax revenue. The outstanding loan balances currently range from $15 million to as much as $8.5 billion. For the last two years, Congress has waived or forgiven the interest payments due on the loans. However, Congress has not extended the interest-free loan provisions into 2011.
This September 30th, 30 states will face their first federal interest payments on the unemployment insurance trust fund loans. Most states have either increased their SUI rates or surcharged in anticipation of the looming interest payment.
New York State has borrowed over $3 billion from the federal Unemployment Insurance Trust Fund and must pay approximately $95 million in interest. In order to pay the interest due, New York has assessed an "Interest Assessment Surcharge" equal to .25% of New York SUI taxable wages.
(Note: Please do not confuse this information with FUI potential credit reduction. All states that have outstanding loans will be required to pay the interest on the loan but not all states with loans are potential credit reduction states for 2011.)