13 December 2019 Arkansas 2020 SUI rates and taxable wage base to decrease The Arkansas Department of Workforce Services announced that the total 2020 state unemployment insurance (SUI) tax rates will range from 0.3% to 14.2%, including a 0.2% stabilization tax, down 0.1% from 2019. The 2020 new employer rate, including the additional tax, will be 3.1%. According to the Department's announcement, SUI benefit conditions are so favorable that the 2020 SUI taxable wage base will drop to $7,000, down from $10,000 for 2019. As we previously reported, legislation enacted earlier this year (SB 298/Act 512) changes the way that Arkansas determines the SUI wage base starting with tax years after 2019.(EY Payroll Newsflash Vol. 20, #063, 5-9-2019.) The SUI wage base, set by law at $10,000 for 2018–2019, will now be determined each year by the average seasonally unadjusted SUI benefit rate for the preceding fiscal year (July 1 through June 30). Depending on the SUI benefit rate, the SUI wage base could range from $7,000 to $10,000. In addition, during times when the SUI trust fund balance falls below a specified level, the SUI wage base could increase to $11,000 or $12,000. 2017 HB 1405 (Act 734) previously reduced the Arkansas SUI wage base from $12,000 to $10,000, effective January 1, 2018 through December 31, 2019. (EY Payroll Newsflashes Vol. 18, #103, 6-12-2017 and Vol. 19, #204, 12-12-2018.) The Department was scheduled to issue employer 2020 SUI tax rate notices during the first week of December 2019.Experience-rated employers may make a voluntary contribution to reduce their assigned 2020SUI tax rate by March 31, 2020. Election to use one year of taxable payroll, rather than the three- or five-year average, in rate computation — election deadline is July 31 The Department uses the lower of the three- or five-year average calendar year taxable payroll in the computation of an employer's experience rate. An experience-rated employer whose previous calendar year's total taxable payroll (i.e., calendar year 2019 for use in the 2021 SUI tax rate calculation) is less than the three- or five-year average annual payroll may elect to use the previous calendar year's payroll as the payroll factor in computations of the experience rate. Employers that wish to select this option must make their request in writing no later than the July 31 immediately preceding the particular rate year. Requests should be addressed to: Arkansas Department of Workforce Services, Employer Account Services, PO Box 8007, Little Rock, AR 72203. The base SUI tax rate assigned to negative-balanced employers is 6.0%. Once an employer is assigned a 6.0% deficit rate for two years an additional assessment of 2.0% is added raising the base rate to 8.0%. If the account remains deficit for four years an additional assessment of 4.0% is added bringing the base rate to 10.0%. At six years deficit rating, the additional assessment is 6.0% and the base rate is 12.0%. Starting in 2016 an account with a deficit rating for eight years or more receives an 8.0% additional assessment for a total base rate of 14.0%. (Employer handbook.) For 2020, the maximum SUI tax rate will be 14.2%, including the 0.2% stabilization tax. Negative-balanced employers affected by additional surcharges may voluntarily pay off their negative balance by the March 31, 2020 voluntary contribution deadline and avoid the addition of 2.0%-8.0% to their SUI tax rates. For more information on Arkansas SUI taxes, see the Department's website.
Document ID: 2019-2207 | |||||||||
