On October 13, 2009 the Connecticut UI Trust fund became insolvent, forcing the Connecticut Department of Labor to secure federal loans to cover the rising costs of unemployment. As of April 1, 2011, Connecticut still has $710,439,867.88 in outstanding federal loans. Unless the Federal government passes a bill that will extend the freeze on the interest payments, Connecticut employers will have to pay interest on the outstanding Federal loans beginning with wages paid during 2011.
Connecticut unemployment law provides for a Special Assessment to be collected from taxpaying entities to pay interest due on any outstanding Federal loans. The Special Assessment is based on several variables, including the actual amount owed by the state as a whole and the total number of active employers as of August 1, 2011. The Connecticut Department of Labor estimates that the Special Assessment will be $40 per employee for 2011. The notice of assessment will be mailed on or before August 1, 2011 and your payment will be due by August 31, 2011.
Additionally, Connecticut is currently projecting that their federal loans will not be repaid by the November 10, 2011 deadline. As a result, Connecticut employers can expect their calendar year 2011 FUTA tax rate to increase from 0.80% to 1.10% (an increase of $21 per employee). The anticipated additional FUTA tax will be payable in January of 2012.
In summary, Connecticut employers can expect to pay an estimated additional $61 per employee between August 31 of this year and January 31 of next year.
For further details, attached please find a copy of the Connecticut Department of Labor’s Employer Information Notice.
As always, if there are any questions please do not hesitate to contact us.
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