Employers can reduce their employment tax burden by better understanding state and federal employment tax laws, two employment tax specialists said May 10 at the American Payroll Association’s 40th Payroll Congress.
Reducing an employer’s employment tax burden varies depending on the situation, said Thomas Towson, the employment tax services director for Equifax Workforce Solutions.
Employers use statutory elections, such as voluntary contributions, to reduce their state unemployment tax rates, said Rori Carney, a director for Equifax Workforce Solutions. However, the state usually does not issue the revised tax rate until much later, she added.
“It could take the state a quarter, maybe two, to issue a revised rate tax notice,” Carney said. “Always pay the tax rate you are assigned until you get the revised rate.”
Mergers and acquisitions can also revise an employer’s SUI rate through a transfer of experience, added Towson. The transfer of experience can increase or decrease an employer’s unemployment tax rate, and the effective date of the rate revision varies by state. Some states take years to issue the revised rate.
If merged entities end up overpaying employment taxes because of a revised unemployment tax rate, they can request a refund from the state or use the overpayment for...
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