28 December 2017 Ohio 2018 SUI tax rates and wage base increase, surcharge removed — Employers must file quarterly returns electronically starting in 2018 The Ohio 2018 state unemployment insurance (SUI) tax rates will range from 0.3% to 9.0%, up from the 2017 range of 0.3% to 8.8% (many brackets remained the same, while others increased by 0.1%-0.2%). Employers, however, will not pay the additional 0.6% mutualized surcharge that applied in 2017. New employers, with the exception of those in the construction industry, will continue to pay at 2.7%. New construction employers will pay at 6.0% for 2018, down from 6.2% for 2017. Employers can potentially reduce their 2018 SUI rate if they take advantage of statutory elections by the deadline of January 2, 2018 (extended from December 31, 2017, because the statutory deadline falls on a Sunday). Beginning with the 2018 first quarter, employers are required to file quarterly returns electronically. As the result of 2016 legislation (SB 235), the SUI taxable wage base will increase from $9,000 to $9,500 for calendar years 2018-2019. The taxable wage base reverts to $9,000 effective January 1, 2020 (unless changed by future legislation). (Tax Alert 2017-5) In 2017, experience-rated employers paid an additional surcharge of 0.6%, which is used to repay the state's federal unemployment insurance loan. Although the surcharge is combined with the SUI tax rate on the quarterly contribution return, employers do not receive credit for this contribution to their SUI accounts and it is not reported on the federal Form 940 as a certified federal unemployment insurance tax. The Ohio Department of Job & Family Services issued the 2018 tax rate notices to employers on November 22, 2017. Employers that registered to file and pay electronically also received their 2018 SUI tax rates through the Department's electronic reporting system. Employers may protest the information used in computing their 2018 SUI tax rates by December 22, 2017. (Email response to inquiry, department official, Ohio Department of Job & Family Services, November 24, 2017.) Due to recent economic conditions, the Ohio Unemployment Compensation Trust Fund continues to be at more than 60% below what is considered the "minimum safe level" as of the computation date of the 2018 rates. Therefore, the 2018 tax rates will continue to include an across-the-board increase to protect the financial integrity of the trust fund. This increase will help rebuild the trust fund to the appropriate level. The additional taxes paid as a result of the increase are credited 50% to the mutualized account and 50% to employers' accounts. Employers that did not furnish the wage information necessary for the computation of their 2018 experience rate by September 1, 2017, will be assigned a contribution rate equal to 125% of the maximum experience rate possible, for a total rate of 11.3% for 2018. — There's still time to remove the 2018 penalty rate. If the employer files the necessary wage information by January 2, 2018 (extended because the statutory deadline of December 31, 2017, falls on a Sunday), the rate will be revised to the appropriate SUI experience rate. Employers that file the necessary wage information after January 2, 2018, but within 18 months after that date, will have their 2018 SUI tax rate revised to 120% of the rate that would have applied if the employer had timely furnished the wage information. Ohio employers may be able to lower their SUI rates for 2018 by taking advantage of statutory elections offered by Ohio. These include: (1) a voluntary contribution and/or (2) a joint account or "Common Rate Group." Experience-rated employers may make a voluntary contribution to reduce their assigned SUI tax rate by January 2, 2018 (extended because the statutory deadline of December 31, 2017, falls on a Sunday). The voluntary payment increases the amount of the employer's reserve account and thereby may reduce the employer's SUI tax rate. Not all voluntary contributions are advantageous, and the advantages of a voluntary contribution may be amplified by anticipated increases in an employer's workforce. Companieswith multiple accounts in Ohio may also lower their overall SUI costs by forming a joint account (referred to in Ohio as a common rate group) by January 2, 2018 (extended because the statutory deadline of December 31, 2017, falls on a Sunday). Common rate groups are only available to Ohio employing entities that are commonly owned. Other restrictions also apply. By forming a common rate group, the unemployment experience of two or more Ohio employers are combined to obtain a single SUI tax rate. The members of a common rate group with favorable employment history can share their unemployment insurance reserves with other members of the common rate group, effectuating an overall reduction in state unemployment taxes. In a large corporate organization, not all members need to be included in the common rate group election. Instead, entities may be included in the common rate group based on the overall desired SUI tax rate results. A common rate group election offers an above-the-line tax benefit that does not require a change in the corporate structure. Even more advantageous is the fact that members of a common rate group may dissolve the group after only one year. Each entity continues to file separate SUI returns after the common rate group is established. To achieve the benefit of a common rate group election, an application must be filed (postmarked) with the state by January 2, 2018, for the 2018 tax year. To achieve the benefit of a voluntary contribution, the payment must be postmarked by January 2, 2018. Effective January 1, 2018 (requirement will apply to first quarter 2018, due April 30, 2018), all Ohio employers must file the quarterly contribution and wage report electronically over the Ohio Department of Job & Family Services online reporting system, the Employer Resource Information Center (ERIC) or the Ohio Business Gateway (OBG). For more information regarding SUI taxes in Ohio, see the Department's website or contact the Contribution Section at +1 614 466 2319. Document ID: 2017-2217 |
