If Ohio fails to act, unemployment penalties will cost millions

If Ohio fails to act, unemployment penalties will cost millions
On Behalf of Mockensturm, Ltd | May 05, 2016 |

For a business in Ohio with employees, unemployment insurance tax is one of many taxes that must be paid. In the last decade, during the recession, many businesses closed and many employees were forced into the unemployment roles. This increase quickly exhausted the state’s Unemployment Insurance trust fund reserves and Ohio needed to obtain federal money to make up the shortfall.

However, like all loans, this debt had to be paid back. Ohio businesses have been paying this back through a significant additional charge on the per employee unemployment insurance costs. Because Ohio is behind in the payments, the lender (the federal government) imposes increasing penalties.

The Ohio legislature could vote to pay off the outstanding debt, and stop additional penalties from accruing. If Ohio fails to pay the remaining balance that is approaching $240 million, the current payment of $147 per employee would increase for next year to $168. This tax increase could be averted if the legislature comes through and pays off the debt before the November deadline.

Employers would not get a free pass, however, and would repay Ohio via a six-month surcharge on unemployment insurance. This repayment would be a much better deal as the per employee cost would be reduced to $42 with an additional surcharge of $45. This would make the total payment $87 per employee, and save employers $81. It is clear why employers are very supportive of this proposed measure.

If you have employees, and must pay these taxes, it is important to ensure that you have a competent process in place to properly account for and track all of these taxes. Failure to pay your payroll and unemployment taxes can be costly, both in term of having to repay the delinquent taxes and any penalties to the state or federal government for your error.

Source: mydaytondailynews.com, “Ohio businesses could save millions in taxes under proposal,” Kara Driscoll, May 24, 2016

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