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Michigan Announces the Suspension of the Unemployment Insurance Solvency Tax
Article ID: 1012350
Overview
Michigan Governor Granholm signed House Bill 4239, which suspends the Unemployment Insurance Solvency Tax that was implemented by Michigan Unemployment Insurance Agency beginning January 1, 2009. Affected employers should begin receiving notification from the agency by late March of the suspension of any Solvency Tax rate that was initially assessed on Form UIA 1771, Tax Rate Determination for Calendar Year 2009, if applicable.
Background
The Michigan Employment Security Act requires that a solvency tax be imposed if the balance in the Trust Fund is less than the total amount of un-repaid federal loans. The Solvency Tax is applied to negative balance employers only. Negative balance employers are employers who have paid less in state unemployment taxes than the amount of benefits paid to their former employees. The negative balance employer must also have had to pay unemployment taxes for five consecutive years. The American Recovery and Reinvestment Act that President Obama signed in February 2009 granted states a two-year waiver from having to pay the interest owed on money borrowed to fund unemployment benefits for workers.
The Michigan Employment Security Act requires that a solvency tax be imposed if the balance in the Trust Fund is less than the total amount of un-repaid federal loans. The Solvency Tax is applied to negative balance employers only. Negative balance employers are employers who have paid less in state unemployment taxes than the amount of benefits paid to their former employees. The negative balance employer must also have had to pay unemployment taxes for five consecutive years. The American Recovery and Reinvestment Act that President Obama signed in February 2009 granted states a two-year waiver from having to pay the interest owed on money borrowed to fund unemployment benefits for workers.
Information
Frequently asked questions
Who is affected?
You may be affected if you currently make UI contributions in the State of Michigan or if you currently have a valid Michigan - UIA Employer Number; and had a negative balance in your experience account as of June 30 of the preceding calendar year and have had to pay unemployment taxes for five consecutive years.
When is the suspension of the Solvency Tax effective?
The suspension of the Solvency Tax is effective January 1, 2009.
How do I remove the Solvency Tax in QuickBooks?
The Solvency Tax was in addition to the assigned experience rate and shown as a separate line item on Form UIA 1771, Tax Rate Determination for Calendar Year 2009, if applicable. The Solvency Tax rate was to be included in the total UI tax rate for 2009 when entered in QuickBooks. Once you have received the revised rate notification from the agency, please take the following steps:
- From the Payroll Item List, select MI - Unemployment Company
- Click Next to get to the Company tax rates for 2009 screen
- Enter the total Company rate in each of the Company rate boxes
- Continue to click Next, and then click Finish.
Who do I contact for more information on the Solvency Tax suspension?
Employers may contact the Michigan UIA Employer Customer Relations Hotline at (800) 638-3994 or send an email to TaxSupport@Michigan.gov.
