US Tax Newsroom

 Tax News Update    Email this document    Print this document  

November 12, 2019
2019-2018

Pennsylvania 2020 SUI tax rates to decrease, taxable wage base unchanged; quarterly electronic reporting format to change effective January 1, 2020

The Pennsylvania Department of Labor & Industry announced that the 1.1% interest tax factor, that has been added to employers' assigned tax rates for several years, will not be in effect for calendar year 2020.

The monies collected from this additional tax were used by the Department to pay the principal and interest due on the bonds sold to repay the state's federal UI loan.(Employer UC & tax services important information, Pennsylvania Department of Labor & Industry website, November 2019.)

As a result, the calendar year 2020 employer state unemployment insurance (SUI) experience tax rates will range from 1.2905% to 9.9333%, down from 2.3905%, to 11.0333% for 2019. The new employer rates will remain at 3.6890% for non-construction employers and 10.2238% for construction employers.

The SUI taxable wage base will continue at $10,000 for 2020.

The 2020 employee SUI withholding rate will remain 0.06% on total wages.

Mailing of 2020 rate notices

The Pennsylvania Department of Labor & Industry, Office of UC Tax Services will mail the 2020 SUI rate notices, Form UC-657, on December 31, 2019. Employers will be able to access their rate notice information in their UCMS employer portal.

Employers will have the following important tax deadlines:

  • Experience-rated employers may make a voluntary contribution within 30 days of the mailing date on the rate notice.
  • Employers may file an appeal of their SUI tax rate within 90 days of the mailing date of the rate notice. The surcharge adjustment and additional contribution factors are not appealable items.
  • Pennsylvania employers with a negative reserve ratio of greater than 20% as of the computation date may elect to have their negative balance reduced to negative 20% of the average annual taxable payroll. Election must be made between January 1 and April 30 of the rate year. The employer is assigned the maximum experience-based SUI rate for the current and next two years from the date of election. Care should be taken in making this election as the election is irrevocable after 10 days.

2020 SUI tax rates

Based on the current level of the Pennsylvania SUI trust fund and economic forecasts for the coming year, the following solvency measures are in effect for calendar year 2020:

  • 5.4% (.054) surcharge on employer contributions. The surcharge adjustment (a component of the SUI tax rate) is computed by multiplying the employer's 2020 basic rate by the 5.4% surcharge. The surcharge adjustment will be factored into the total 2020 contribution rate.
  • 0.75% (.0075) state adjustment factor. The state adjustment factor acts as an assessment on all employers and uniformly levies the common benefit costs that are paid out of the Pennsylvania UC Fund, but which are not charged to any specific employer account. The state adjustment factor is uniformly applied to all experience-rated employers.
  • 0.5% (.005) employer additional contribution tax. The additional contribution tax is added on to the employer's assigned tax rate. This tax is not subject to the surcharge adjustment and is not applicable to non-delinquent newly liable and reimbursable employers.
  • 1.10% (.011) interest tax factor removed for 2020. This additional contribution tax was added on to the employer's assigned tax rate for several years and discontinued as of calendar year 2020. The monies collected were used by the department to pay the principal and interest due on the bonds sold to repay the federal UI loan.
  • 0.06% (.0006) tax on employee wages. The employee withholding SUI tax is submitted with each Form UC-2/2A Quarterly Report. Employee withholding is not limited to the $10,000 taxable wage base for employer contributions; it applies to the total wages paid in 2020 (resulting in 60 cents per $1,000 earned).
  • New employer rate of 3.6890% (.036890). The newly liable non-construction employer rate continues at 3.6890% for 2020 (including the 5.4% surcharge only, because the 0.5% additional contribution tax does not apply to newly liable employer rates).
  • New construction employer rate of 10.2238% (.102238). The newly liable construction employer rate continues at 10.2238% for 2020 (including the 5.4% surcharge only, because the 0.5% additional contribution tax does not apply to newly liable employer rates).
  • Standard tax rates. Contributory employers that have a sporadic employment history (having filed "zero" returns during each quarter of the last four years ending on the computation date or been inactive for less than five years) will for 2020 be assigned a standard rate of 6.1916% if positive balanced or 10.1968% if negative balanced.
  • Additional 3.0% (.030) for delinquent employers. As in the past, if a delinquency exists on the account through the second quarter of 2019, 3.0% is added to the basic tax rate. An employer assigned the delinquency rate may have their rate recalculated to their normally assigned rate by (1) filing an appeal of the delinquency rate within 90 days from the mailing date of the rate notice, (2) filing any outstanding registration documents and (3) filing outstanding quarterly tax reports and paying the balance due in full or entering into a payment plan that is approved by the Department.

The delinquency rate assigned to delinquent employers is adjusted by the solvency measures applicable to the particular year. The delinquency rate is the sum of thebasic rate(reserve ratio factor + benefit ratio factor + state adjustment factor) +3%(3%) + thesolvency measures(surcharge adjustment + additional contributions).

Note that If an employer defaults on an approved payment plan, the delinquency rate will be retroactively reinstated.

  • A 2.4% (.024) benefit reduction will apply for 2020.With few exceptions, the weekly UC benefit amount for all claimants will again be reduced by 2.4% for calendar year 2020.

For a historical rate chart (2013–2020), go here.

Quarterly filing format changes effective January 1, 2020

For quarterly SUI reporting over the Unemployment Compensation Management System (UCMS), the following format changes will be implemented by the Department on January 1, 2020:

  • ICESA files will be accepted for both tax and wage reporting of original files. Previously, the ICESA file could only be used for wage reporting.
  • TAB and SSA file formats will no longer be accepted.
  • CSV files will require a Federal Identification Number (FEIN) in each E record and contact information in the A record. Filers already have the ability to add the FEIN and contact information; however, they will become required fields effective January 1, 2020.

After January 1, 2020, the specifications for reporting (Publication UC-2010) will be updated to remove the unacceptable file formats and specifications. For questions regarding the file specifications, contact the Office of UC Tax Services at +1 866 403 6163, option 2.

For more information on SUI taxes in Pennsylvania, see the Department's website or contact the UC Employer Contact Center at +1 866 403 6163.

Contact Information

For additional information concerning this Alert, please contact:

Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)

———————————————
ATTACHMENT

EY Payroll News Flash

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2022, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement