November 8, 2017 South Dakota 2018 SUI tax rates to decrease, wage base unchanged, new administrative surcharge goes into effect As the result of legislation enacted earlier this year, the South Dakota 2018 state unemployment insurance (SUI) rates will range from 0.0% to 9.35% on new Rate Schedule B, a reduction of 0.15% for most employers. Potentially offsetting the lower unemployment insurance contributions next year for some employers is a new administrative surcharge of 0.02% of taxable wages that effective first quarter 2018, applies to each experience-rated employer having a reserve ratio of less than 2.25% (the lowest rate bracket on the rate schedule). The administrative fee surcharge will not be credited to the employer's experience-rating account, will not be certified by the state as a SUI contribution, and should not be used when completing the federal Form 940 state contribution worksheet. Experience-rated employers continue to pay the additional investment fee surcharge which ranges from 0.0% to 0.53%. This surcharge also is not credited to the employer's experience-rating account, will not be certified by the state as a SUI contribution, and should not be used when completing the federal Form 940 worksheet. New employers continue to pay at 1.2% for the first year of liability (6.0% for construction) and 1.0% for the second and third years of liability (3.0% for construction), plus the investment fee surcharge of 0.55%. New employers will not pay the new administrative surcharge of 0.02% until experience-rated. (Email response to inquiry, South Dakota Department of Labor; South Dakota Department of Labor website.) 2018 SUI taxable wage base The 2018 SUI taxable wage base will remain at $15,000. Voluntary payment may lower an experience rate Experience-rated employers may make a voluntary contribution to reduce their assigned SUI tax rate (and potentially the investment fee surcharge) by December 31, 2017. Mailing date of 2018 rate notices The 2018 SUI tax rate notices were mailed to employers on October 30, 2017. Legislation decreased SUI rates for calendar year 2018 As we previously reported as a possibility, legislation enacted earlier this year (HB 1097) establishes two new rate schedules that allow for a permanent rate reduction for employers and changes the method of determining UI trust fund solvency to the use of an average high cost multiple (AHCM), as recommended by the US Department of Labor. An AHCM of 1.6 will be used as the starting point for an adequate UI trust balance. Because the size of the state's UI trust fund balance as of June 30, 2017, allowed for the calculation of an AHCM of greater than 1.6, new rate schedule B will go into effect for calendar year 2018. The bill also included the institution of a new 0.02% administrative fee surcharge to fund the UI program. Effective first quarter 2018, each experience-rated employer having a reserve ratio of less than 2.25% (the lowest rate bracket on the rate schedule) will pay a new administrative fee surcharge of 0.02% on taxable wages. The administrative fee surcharge will not be credited to the employer's experience-rating account, will not be certified by the state as a SUI contribution, and should not be used when completing the federal Form 940 worksheet. Further UI trust fund projections indicate the June 30, 2018 AHCM is expected to remain at greater than 1.6 and the 0.15% SUI rate reduction may continue for calendar year 2019. ———————————————
——————————————— EY Payroll News Flash
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