The Texas Workforce Commission (TWC) announced that issuance of the 2021 state unemployment insurance (SUI) tax rate notices are further delayed until late June or July 2021. The TWC had originally planned to issue rate notices in February 2021, a delay from the normal timeframe of December 2020. (TWC March 2021 tax department tip of the month; TWC's news release.2-24-2021; TWC news release, 12-2-2020.)

According to the TWC, there is a delay in computing the 2021 SUI tax rates because Texas Governor Greg Abbott, the state legislature and the TWC are crafting legislation that would further protect employers from 2021 SUI tax rate increases arising from the impact of COVID-19 UI benefits on the state's unemployment insurance (UI) trust fund. The TWC has not been charging employer accounts with COVID-10 UI benefits (chargebacks) and this has provided some relief from increases to the 2021 SUI tax rates assigned to employers. (EY Tax Alert 2020-0950; 4-10- 2020; TWC COVID-19 website.)

Because of the delay in computing the 2021 SUI tax rates, Governor Abbott suspended for 2021 the ability of experience-rated employers to make voluntary contributions to potentially reduce their SUI tax rates. Additionally, the deadlines for employers to submit their SUI contributions for the first- and second-quarter 2021 are extended.

Deadline for first- and second-quarter 2021 SUI tax payments extended

The TWC announced that because the issuance of the 2021 SUI tax rates are delayed, employers are given an extension of the deadline to pay their first- and second-quarter 2021 SUI contributions.

For the 2021 first quarter the deadline is extended from April 30, 2021 to August 2, 2021. For the 2021 second quarter the deadline is extended from August 2, 2021 to September 30, 2021.

Note, however, that the deadlines to file the first- and second-quarter SUI returns are not extended from the original due dates of April 30, 2021 and August 2, 2021, respectively. The third- and fourth-quarter 2021 SUI tax payment and return deadlines are not extended.

Use of estimated 2021 SUI tax rates allowed

Employers may select and enter an estimated 2021 SUI tax rate if their payroll software system requires that one be entered. Estimated tax rates allowed are as follows:

• New employers (operating less than 18 months) may use 2.7%
• Experience-rated employers (operating more than 18 months) may use their actual 2020 SUI tax rate as an option or one of the following tax rates:
• 2020 minimum tax rate of 0.31%
• 2020 average tax rate of 1.14%
• 2020 maximum tax rate of 6.31%

Once the official 2021 SUI tax rate notice is issued by the TWC, employers should update their payroll software systems to the correct tax rate.

Once released, 2021 SUI tax rates will be available online using the employers' Unemployment Tax Services (UTS) system.

For more information on SUI taxes in Texas, see the TWC's website.

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