April 29, 2021
Massachusetts delays first quarter 2021 SUI contribution payment until June 1, 2021; solvency assessment significantly increases for 2021
The Massachusetts Department of Unemployment Assistance (DUA) announced that in an effort to assist employers, the deadline for submitting the first-quarter 2021 state unemployment insurance (SUI) contribution is extended to June 1, 2021. However, the first-quarter 2021 employment/wage report due date is unchanged from April 30, 2021.
The payment extension is provided because of the late release of the 2021 SUI tax rates in April 2021 following the enactment of legislation (HB 90, 2021 Chapter 9) that froze the SUI tax rate schedule for 2021–2022 at the same rate schedule as was used for 2020 (Schedule E), with SUI taxes ranging from 0.94% to 14.3%. (See EY Tax Alert, 2021-0876.)
Solvency assessment significantly increases for 2021
The statewide solvency assessment (subtracted from an experience-rated employer's account balance before determining the reserve ratio that is applied to the rate schedule) increased substantially for 2021 because of the impact that COVID-19 UI benefit claims had on the state's UI trust fund balance.
According to the Associated Industries of Massachusetts (AIM), the solvency assessment has increased tenfold from 0.58% in 2020 to 9.23% in 2021. Consequently, despite the freeze on SUI tax rates to the 2020 Schedule E, employers are generally experiencing an increase in their assigned SUI tax rates for 2021.
AIM is working with Governor Charlie Baker's administration, the DUA, and state legislators to find ways to mitigate the impact that the increase in the statewide solvency assessment is having on employers. AIM is also encouraging the governor to deposit a portion of CARES Act funds into the UI trust fund to bolster the balance and reduce the impact of the COVID-19 UI benefits on employers.
Additionally, under HB 90, the DUA is permitted to assess surcharges on employers to pay the interest due on the state's UI trust fund loans, which ranges from 0.1% to 0.76% based on the employer's SUI reserve ratio. The first interest payment will be due from the state in the fall of 2021. Because federal law does not allow the state to pay the interest from the SUI trust fund, employers will have to pay the surcharge unless other financing is secured.
Ernst & Young LLP insights
The temporary delay in paying Massachusetts SUI contributions may be a welcome relief to many employers that have seen a sharp increase in their SUI rates for 2021.
EY Payroll News Flash