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The Florida Department of Revenue announced that, due to Governor Ron DeSantis's Executive Order 21-80, the deadline for paying first-quarter 2021 state unemployment insurance (SUI) taxes is extended to June 1, 2021 (May 31, 2021 falls on a federal holiday). Note, however, that the first-quarter 2021 contribution and wage report (Form RT-6, Employer's Quarterly Report) is still due by April 30, 2021. (Email, Florida Department of Revenue, April 2021.)

The Department's email indicates that small employers that file a paper return have until June 1, 2021 to mail (postmark) or hand-deliver the first-quarter 2021 SUI contribution and wage report and payment.

2021 SUI rates increased due to the effect of COVID-19 UI benefits on the state's UI trust fund; taxable wage base remains $7,000

Florida's 2021 SUI tax rates, also referred to as "reemployment tax," increased to range from 0.29% to 5.4%, up from 0.1% to 5.4% for 2020. The SUI new employer rate remains at 2.7% for 2021. The 2021 SUI taxable wage base continues at $7,000. This is almost a 200% increase in experience-rated employers' tax rates, except for those employers that have been assigned the maximum rate of 5.4% for 2020—2021.

Variable SUI tax rates are adjusted annually and are based on the employer's benefit experience, the balance of the UI trust fund, and other adjustment factors. When economic conditions result in abnormally high unemployment accompanied by high benefit charges, the UI trust fund can be adversely affected. This effect triggers a positive fund balance adjustment factor when the UI trust fund is below 4% of the previous year's taxable payroll, increasing SUI tax rates for most employers.

Although employers were not charged with COVID-19 UI benefits in 2020, the effect of COVID-19 UI benefits on the state's UI trust fund resulted in the finding that the UI trust fund was below the 4% mark, activating the fund balance adjustment factor and increasing the 2021 SUI rates. (EY Tax Alert 2020-1475, 6-4-2020; Florida Department of Economic Opportunity fact sheet.)

The 2021 SUI tax rate is computed using the sum of three factors — the employer's benefit ratio (three years of UI benefit charges divided by three years of taxable payroll), the variable adjustment factor (employer's benefit ratio multiplied by a common multiplier) and the flat final-adjustment factor.

Legislation would reduce 2021 SUI tax rates

SB 50, which is waiting for Governor Ron DeSantis's approval, would reduce the 2021 SUI tax rates by recalculating the rates without applying the fund balance adjustment factor. If enacted, the bill would require the Florida Department of Revenue to issue revised rate notices and post the revised rate on the Department's online tax website. However, employers must still file their first-quarter 2021 SUI reports and pay the contributions due on time. Any employer that remits an amount based on the originally assigned SUI tax rate and, as a result has overpaid due to a revised rate, will receive a refund.

The bill also directs that the 2022 SUI tax rates be calculated without applying the fund balance adjustment factor. Also, the bill requires that the state make three deposits during 2021 to the UI trust fund balance. The funding would come from online sales tax collected from out-of-state e-commerce companies as required under SB 50.

We will issue another alert when the outcome of the bill is known.

2021 SUI tax rate notices

The Department mailed the original 2021 SUI tax rate notices to employers on December 22, 2020. Tax rate information is also available online over the employer's reemployment tax website account. For more information, call +1 850 488 6800 or see the Department's website.

Florida allows for partial deferral of SUI contributions through the DOR's installment plan

According to the Department's website, employers can make installment payments for the first three quarters of a tax year. To qualify, Form RT-6, Employer's Quarterly Report, wage data and the installment payment must be timely submitted each quarter. An employer that chooses to pay in installments must pay a one-time installment fee of $5.00 per calendar year, with the report for the quarter in which the election for installments is made. Both electronic and paper filers are eligible for the installment payment option.

Employers are instructed to divide the first-quarter SUI tax due into four equal payments, second-quarter into three equal payments, and third-quarter into two equal payments. There is no installment option for the fourth quarter. Employers may choose the installment option for any or all of the first three quarters. They are not required to file an application or fill out any extra paperwork to pay by installments.

Employers that submit the $5 installment fee and the minimum amount due will receive a notice from the Department confirming their placement into the plan. The notice will include a payment schedule and, if paper reports were filed, installment coupons. If, however, the employer fails to include the required $5 fee or the minimum amount due it will be notified that it was not placed into the plan and that full payment is due immediately. Electronic filers will not receive installment coupons. The Department offers an electronic due date reminder service to help employers file on time. Paper filers can also subscribe to this service. (EY Tax Alert 2020-1046, 4-20-2020.)

Ernst & Young LLP insights

According to the federal Treasury Direct website, as of April 9, 2021, Florida has not yet requested the option, if needed, to receive federal UI Title XII advances (UI loans).

For more information on Florida SUI taxes, call +1 850 488 6800 or see the Florida Department of Revenue's website.

For information on Florida UI benefits and the state's response to COVID-19 unemployment, see the Florida Department of Economic Opportunity website.

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