April 13, 2021 Ohio employers granted waiver of penalty and interest for all four quarters of 2020 SUI returns and payments; 2021 SUI tax rates increased due to trust fund insufficiency The Ohio Department of Job and Family Services announced that it extended to all four quarters of 2020 the waiver of interest and penalty charges for late filing and payment of state unemployment insurance (SUI) tax returns. (Tax and payment implications during COVID-19.) Although the filing deadlines for all 2020 SUI tax returns and payments were not extended, employers that were unable, due to COVID-19, to file their returns and pay the corresponding payments are not penalized or assessed penalties under Ohio Emergency Order 2020-03D. Originally, only first quarter 2020 returns were eligible for these waivers. (EY Tax Alert 2020-0780, 3-30-2020.) For contributory employers that submitted any of their 2020 SUI returns and tax payments late, the Department is waiving the late reporting penalty and late payment interest assessment once the returns are filed and taxes paid in full. For reports and payments the Department received between May 1, 2020 and January 31, 2021, the Department automatically waived the late penalty and interest and did not require employers to submit waiver requests. For late returns filed and payments received after January 31, 2021, employers are required to submit waiver requests by filing Ohio Form JFS 20132 on paper via the Department's electronic reporting system. The Department will waive the late reporting penalty and interest once waiver requests are received and processed. The same rules generally apply to reimbursing employers unable to make their monthly repayment of UI benefit charges from March 2020 to January 31, 2021 or unable to file their quarterly returns. After January 31, 2021, reimbursing employers must request waivers of penalties and interest. Note that SUI tax payments received by the Department after July 31, 2020 were not included in the 2021 SUI rate calculation. 2021 SUI tax rates increased The Ohio 2021 SUI tax rates range from 0.8% to 9.8%, up from the 2020 range of 0.3% to 9.4%. The increase is due to an inclusion of a "mutualized" flat tax rate of 0.5%, which was added to bolster the state UI trust fund and pay the COVID-19 UI benefits charged to the mutualized account rather than individual employer accounts. New employers, except for those in the construction industry, will continue to pay at 2.7%. New construction employers continue to pay at 5.8% for 2021. The 0.5% mutualized rate is not added to new employer rates. The 2021 SUI taxable wage base remains at $9,000. Mutualized rate added to 2021 tax rates A separate account, known as the mutualized account, is maintained primarily to keep the state's UI trust fund at a safe level and recover the costs of UI benefits that were paid but not chargeable to individual employers. When the mutualized account has a negative balance, the costs are recovered and the money restored to the account through a mutualized tax levied on all employers that are eligible for an experience rate. The mutualized tax is used solely to pay UI benefits. As of the computation date for the 2021 rates, the mutualized account had a negative balance and a mutualized rate of 0.5% is levied on all employers that are eligible for an experience rate. The mutualized rate is shown on the employer's UI tax rate notice. The additional taxes paid as a result of mutualized rate will be credited 100% to the mutualized account to recover the costs of UI benefits charged to the account. Employer accounts will not be credited with the mutualized taxes paid in 2021. To lessen the effect of COVID-19 UI benefit payments on individual employer accounts, these benefits are not charged to individual employer accounts, but to the mutualized account, for the duration of the emergency period (Executive Orders 2020-24D, 2020-03D; 2020-01D; EY Tax Alert 2020-0781,3-30-2020.) 2021 SUI tax rates are the result of continued economic conditions As of the computation date of the 2021 tax rates, and due to recent economic conditions, the Ohio UI trust fund continued to be below what is considered the "minimum safe level." Therefore, the 2021 tax rates continue to include an across-the-board increase to protect the financial integrity of the SUI trust fund. This increase will help rebuild the SUI 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. Penalty rate applies for late wage reporting Employers that did not furnish by September 1, 2020 the wage information necessary for the computation of their 2021 experience rate, are assigned a contribution rate equal to 125% of the maximum experience rate possible, for a total rate of 12.3% for 2021, up from 11.8% for 2020. If the employer filed the necessary wage information by December 31, 2020, the rate was revised to the appropriate SUI experience rate. Employers that missed the December 31, 2020 deadline but file the necessary wage information within 18 months after that date, have their 2021 SUI tax rate revised to 120% of the rate that would have applied if the employer had timely furnished the wage information. For more information regarding SUI taxes in Ohio, see the Department's website or contact the Contribution Section at +1 614 466 2319. See the Department website for information regarding the Department's response to COVID-19. Ernst & Young LLP insights Ohio has had to borrow from the federal government to keep the state UI trust fund solvent so that UI benefits may continue to be paid. According to the federal Treasury Direct website, as of March 9, 2021, Ohio has a federal UI Title XII loan balance of $1,455,439,516.40. ———————————————
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