ETS Tax Intelligence: Identifying and Using SUI Tax Credits
Do you know when and where to look for SUI tax credits?
At some time or another, most employers have received the dreaded underpayment or “balance due” notice from a state unemployment insurance (”SUI”) agency. However, the same agency is not so quick to issue notification of an overpayment or credit on your account. Even the most diligent payroll department may be unaware SUI tax credits exist on their accounts. Credits can go unused for years and continue to accumulate if an employer does not identify the root cause of how a credit occurred.
Employers should conduct annual reviews of all SUI accounts to identify potential credits also develop a plan place to discover and use SUI tax credits for financial benefits.
What is the source of these SUI tax credits?
Credits can be created in many ways including, but not limited to the following:
- An employer’s tax rate being revised between quarters for various reasons
- Transfers of SUI experience due to a merger, acquisition, or internal reorganization
- A successful SUI tax rate protest including a penalty tax rate revision
- A successful appeal of an unemployment claim (resulting in the removal of benefit charges)
- Legislative changes that are enacted mid-year causing SUI rates to change from one quarter to the next.
And don’t forget about the following:
- An expired address of record (“AOR”)
- If a company has not updated an AOR, their SUI tax rate notices may be going to a former address. Often employers will use a prior year’s SUI rate, which may be at a higher tax rate.
- Turnover in payroll department
- Perhaps the person responsible for updating SUI rates each year is no longer with the organization. Unfortunately, this could prevent your tax rates from being updated each year.
How can I find out if there are credits on my accounts?
There are a few ways in which an employer can determine if there are any SUI tax credits:
- Contact the state agency
- SUI agencies will not provide information about an employer’s account without a proper power of attorney (“POA”) on file. If corporate officers, authorized representatives, or third-party vendors have changed, be sure to file a new POA.
- Verify employer accounts on-line
- Some states prefer that employers review their accounts on-line to determine if there are credits on an account.
- Review all state documents carefully when received
- Quarterly contribution and wage reports often show if there is a credit available towards a future payment.
I’ve identified a SUI tax credit on my SUI tax account. What should I do next?
- Identify the state’s refund procedures to recover a SUI credit
- Most SUI agencies will require an employer to file a written request (formal letter or state specific form) for a refund of a credit on account. The agency may require an employer to use a credit toward future contribution payments. Each SUI agency has a deadline to apply for a refund of a SUI credit (typically between two to five years).
- Notify all impacted parties
- Notify your payroll department or third-party payroll tax vender to apply the credit to current or future tax liabilities.
- Be mindful of retroactive rate adjustments
- o Requesting a SUI credit for overpaid contributions may result in a tax rate revision for the current or historical tax rates.
I know this is extremely important, but I’m not sure my team has the time or expertise to review all of this every year. Who can help?
Our team of expert employment tax pros can! In fact, let us do a FREE LookBack tax review for you! It can help discover potential overpaid or duplicated employment taxes that might have cost your business thousands of dollars. A typical LookBack goes beyond the surface to understand your unique employee movement activities, uncovering all that is owed to you. Plus, we can help you to make sure you don’t overpay again! It’s easy to sign-up, just click the button below and an expert will be in contact with you soon!
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