July 1, 2021
Arkansas will not charge regular COVID-19 benefits to employer SUI accounts; law prevents increase in SUI wage base for 2022
Recently enacted legislation (HB 1212/Act 153) allows the Arkansas Department Workforce Services to relieve employer state unemployment insurance (SUI) accounts of regular COVID-19 UI benefits. The provision is retroactive to the week ending April 4, 2020, because Governor Asa Hutchinson declared, and continued to declare, a disaster emergency due to COVID-19. The latest disaster declaration (EO 21-07) expired on March 31, 2021.
Other 2021 legislation (HB 1409/Act 368) will hold the SUI taxable wage base for calendar year 2022 to not greater than $10,000, the same as it was in 2021.
Employers relieved of charging of regular COVID-19 benefits
HB 1212 allows the Department to not charge employer SUI tax accounts with COVID-19 UI benefits, retroactive to the week ending April 4, 2020. The legislation codifies Executive Order 20-54, in which Arkansas Governor Asa Hutchinson ordered that the 2021 SUI tax rates be computed without the UI benefit amounts paid to Arkansas claimants from April 1, 2020 through June 30, 2020, the cut-off date for 2021 rate computation.
The executive order also required that reimbursing nonprofit and governmental entity employers not be charged for UI benefits paid from April 1, 2020 to June 30, 2020. See the governor's news alert for more information.
See a Department newsletter for information on regular UI benefits and charging to employer accounts. See also a Department letter regarding 2020 second- and third-quarter UI benefit charge statements.
Employer reporting of job refusals
Employers are required to report an employee collecting UI benefits who refused to return to work when the workplace reopened. Employers can submit a report of refusal to work by mailing a letter and a list of employees, including the last four digits of their SSN, to their local office or by sending an email to UI.General.Questions@arkansas.gov. Employers may also go online and report a refusal to return to work through the online employer services portal.
Legislation holds the 2022 taxable wage base at $10,000
Under HB 1409, the SUI taxable wage base for calendar year 2022 to not greater than $10,000, the same as in effect for 2021.
Legislation enacted in 2019 (SB 298/Act 512) changed the way that Arkansas determines the SUI taxable 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 (2017 HB 1405, Act 734), is now 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.
For calendar year 2021, the SUI taxable wage base is $10,000, up from $7,000 for 2020.
2021 SUI tax rates remained the same as for 2020; taxable wage base increased
The Department announced that the SUI taxable wage base is $10,000 for 2021, up from $7,000 for 2020.
The total 2021 SUI tax rates continue to range from 0.3% to 14.2%, including a 0.2% stabilization tax. The 2021 new employer rate, including the additional tax, is 3.1%.
To bolster the state's UI trust fund and keep employer taxes from increasing significantly, an Arkansas CARES Act steering committee approved the transfer of CARES Act funds to the state's UI trust fund which helped to keep the 2021 SUI tax rates unchanged from 2021.
2021 stabilization tax
For 2021, the SUI tax rates (including the new employer rate) include a 0.2% stabilization tax. Each employer, except those that have elected to reimburse the UI trust fund in lieu of contributions, is required to pay a Stabilization Tax on wages paid with respect to employment when the assets of the fund on the computation date are less than 2.5% of the total payrolls for employment during the preceding calendar year. The stabilization rate is determined by the assets of the Fund.
2021 mailing of rate notice
Employer 2021 SUI tax rate notices were mailed to employers on January 28-29, 2021.Experience-rated employers may make a voluntary contribution each year to reduce their assigned 2021SUI tax rate by March 31 of the rate year.(Email response to inquiry.)
Election to use one year of taxable payroll, rather than the three-/five-year average in the 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 2020 for use in the 2022 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, P.O. Box 8007, Little Rock, AR 72203.
Tax rates for long-term negative-balanced employers
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 in 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 2021, the maximum SUI tax rate is 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, 2021 voluntary contribution deadline and avoid the addition of 2.0%-8.0% to their SUI tax rates.
State ends COVID-19 pandemic UI benefits
On May 7, 2021, Arkansas Governor Asa Hutchinson announced that the Division of Workforce Services (DWS) is directed to end the State of Arkansas' participation in the federal supplemental unemployment assistance after June 26, 2021.
According to the letter to the DWS, the following programs are terminated:
The DWS was also directed to provide maximum job search assistance to those Arkansans still receiving unemployment benefits so that they may transition back to employment.
Ernst & Young LLP insights
According to the federal Treasury Direct website, as of July 1, 2021, Arkansas has not yet requested the option, if needed, to receive federal unemployment insurance (UI) Title XII advances (UI loans). For more information on Arkansas SUI taxes, see the Department's website.
EY Payroll News Flash