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Michigan Announces Implementation of the Unemployment Insurance Solvency Tax
Article ID: 1012359
Overview
Michigan Unemployment Insurance Agency has announced that beginning January 1, 2009 the Unemployment Insurance Solvency Tax will be implemented.
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 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.
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 Solvency Tax effective?
The Solvency Tax will be effective January 1, 2009.
When should I set up the Solvency Tax in QuickBooks?
You should set up your tax rates in QuickBooks on or after January 1, 2009.
How do I setup the Solvency Tax in QuickBooks?
The Solvency Tax is 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 will need to be included in the total UI tax rate for 2009 when entered in QuickBooks. Once you are ready to enter your UI tax rates for 2009, 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, which includes the Solvency Tax 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?
Employers may contact the Michigan UIA Employer Customer Relations Hotline at (800) 638-3994 or send an email to TaxSupport@Michigan.gov.
