Because of the insolvency of the state’s unemployment trust fund, the Colorado Department of Labor and Employment has been forced to borrow over $250 million in federal funds to cover the cost of unemployment claims. Unless Congress acts to waive the interest attributable to this loan, the first interest payment will become due on October 1, 2011. Currently, the Department estimates that the interest payment will be approximately $12 million. However, because of a cap on the Solvency Surcharge component of your tax rate, the Department anticipates that this surcharge will not generate enough funds to cover the interest due.
To cover this shortage, each rated Colorado employer will be assessed an additional Trust Fund Assessment Rate that will be mailed to employers sometime in July. The Trust Fund Assessment Rate is chargeable on each employer’s gross wages paid during the fourth quarter 2010. The exact rate will be determined by dividing the amount interest due plus administrative costs by the total gross wages of all rated employers for the one year period ending June 30, 2010.
Once the Department has calculated the actual Trust Fund Assessment Rate, each employer will be issued a notice of amount due as early as the first week in July 2011. The assessment will be payable 30 days from the billing date. We estimate that the cost will be approximately $0.45 – $0.60 per employee.
As always, if there are any questions please do not hesitate to contact us.