Your South Dakota unemployment tax report forms may be a little puzzling this year because a surcharge keeps changing. The surcharge triggers on whenever the State’s Unemployment Trust Fund balance dips below $11.0 Million and remains in effect until the Trust Fund balance exceeds $16.5 Million.
This surcharge is not included on your annual unemployment tax rate notice. Instead, it is included as a separate line item on your quarterly unemployment report forms. For the first and second quarter 2010 the surcharge was 1.00%.
The higher tax rate table and increased taxable wage base enacted by the 2010 legislative session (Senate Bill 186) which went into effect for calendar year 2010 have accomplished the goal of shoring up the State’s Unemployment Trust Fund. As a result, the employer surcharge has been reduced to 0.10% for third quarter 2010 and further reduced to 0.00% for fourth quarter 2010. The South Dakota Department of Labor has forecasted that the unemployment Trust fund will exceed $25 Million by the end of the year and anticipates that the employer surcharge will remain at 0.00% for first quarter 2011.
Fluctuations in the statewide unemployment rate and future solvency of the State’s Trust Fund will ultimately determine whether the employer surcharge will remain at 0.00% for the second quarter 2011.
The South Dakota Department of Labor has recently sent a letter to employers regarding this surcharge (letter attached). We suggest that you keep an eye out for changes in the surcharge throughout 2011.
As always, if there are any questions, please contact us. Click here for a printable version.