Special Assessment Frequently Asked Questions (FAQs)

CLICK ON EACH QUESTION TO SHOW THE ANSWER. CLICK ON THE QUESTION AGAIN TO HIDE THE ANSWER. 1.  How did the UI Trust Fund become insolvent? Since 2007, the average number of workers filing for weekly Unemployment Insurance (UI) benefits has grown significantly.  In 2009 when the economy worsened dramatically and people lost their jobs in record numbers, UI benefit payouts well exceeded UI tax revenues. The result – Connecticut’s Unemployment Trust Fund became depleted or “insolvent” on Oct. 13, 2009.   2.  Once the fund became insolvent in October 2009, how were benefits still paid? In accordance with federal law, Connecticut continued to pay claims without disruption by borrowing funds from the U.S. Department of Labor with a waiver of interest payments for two years.   3.  What is a "special assessment"? Federal loans generally carry interest, but the American Recovery and Reinvestment Act of 2009 (ARRA) contains a provision that waived interest on UI Trust Fund loans to states.  However, the waiver of interest period ended December 31, 2010 and Connecticut, along with more than 20 other states, was required to pay interest on these loans from January 2011. Federal law prohibits states from using unemployment contributions to pay interest charges – therefore, state law requires a separate billing to employers. To comply with the law, on August 1, Connecticut employers will be billed a “special assessment” in order to pay the interest due on the Federal loan.   4.  What is our outstanding loan balance? The law requires the Department of Labor to estimate in July what Connecticut’s total outstanding debt will be as of Sept. 30.  Our current loan balance is approximately $575 million and Labor Department projections suggest that total borrowing could continue over the next two to three years.   5.  How much interest is due? Based on the estimate of $575 million, this year’s total interest assessment is approximately $18 million. The interest rate is set by federal law and is subject to change annually.   6.  Who receives a special assessment bill? The assessment billing is sent to employers conducting business in the state as of July 1 of the billing year and is based on the taxable wages paid by the employer for the one-year period ending the previous June 30.   7.  How was the special assessment calculated? To raise $18 million on a statewide taxable wage base of approximately $18 billion requires a rate of 0.1% (0.001). This rate is applied to the taxable wages you reported to us for the one year period ending June 30th 2012.  (For example, if from 7/1/11 to 6/30/12 you reported total wages of $100,000 and taxable wages of $30,000; your special assessment is calculated as: $30,000*.1% = $30)  NOTE: If you acquired a business which paid taxable wages during that period of time your assessment may be based on wages paid by that business as well as your own.   8.  How much do Connecticut's employers owe for each employee? According to the calculation method used in the preceding question, the rate, established by the Labor Department, equates to $1 per $1,000 of taxable payroll, a maximum of $15 for each employee.   9.  Does every employer have to pay this assessment? Non-profit and governmental employers who reimburse the UI Trust fund dollar for dollar for benefits paid to their former workers do not have to pay this assessment.  New employers who have less than a full experience year of wages will not be billed for this year.  Employers whose total assessment is $10 or less will not be billed.   10. Due to federal legislation, some UI claimants have been able to collect benefits for up to 99   weeks.  Am I paying more because of that? No. The money Connecticut borrowed was spent solely on regular benefits due under existing state law.   11.  I have closed my business but you have sent me an assessment anyway. Do I have to pay this? It depends.  If your business closed after June 30, 2013, you are legally obligated to pay the 2012 special assessment.   If your business closed prior to July 1, 2013, you will be relieved of the assessment.   12.  I think I received a special assessment notice by mistake. What should I do? If you believe you received the assessment notice in error, please notify us in writing by fax (860) 263-6567 or mail to the Connecticut Labor Department, Employer Status Unit, 200 Folly Brook Blvd, Wethersfield, CT 06109.   Include your company name, registration number, federal ID number, date your company went out of business and the company the business was sold to (if applicable).  You may also notify us of your business closure via the internet at: http://www.ctdol.state.ct.us/uitax/web-report.html.   13.  When is my payment due? Employers subject to the special assessment are billed on August 1 with payment due by September 3, 2013.   14.  What if I can't pay on time? Interest at the rate of 1% per month will be added to any balance outstanding on September 4 and each succeeding month.  A one-time penalty is charged in October on any outstanding balance due on October 1.  The penalty rate equals 10% of the amount outstanding or $50, whichever is higher.   15.  How long will I have to budget for this assessment? Current economic projections suggest that we will not be in a position to pay off our federal loans in full for at least the next two to three years.   16.  Will my assessment bill be the same every year? No.  A number of variables affect the amount charged each year; the total amount of interest due each September 30, the federal interest rate for the year, the number of active employers in July each year, the total taxable payroll for all employers in the previous year, and the total taxable payroll you reported. The Department of Labor will continue to provide estimates of the next year's assessment rate but these estimates must, by their very nature, be less than precise.   17.  My unemployment rate rose because I had to lay off workers. Will that cause my assessment to go up as well? No.  The special assessment rate is based on the amount of interest the Department must pay to the federal government and your taxable payroll and does not vary with your unemployment tax rate.   18.  Do I have to pay a higher Federal Unemployment Tax (FUTA) in January 2014 because of the money Connecticut borrowed? Yes.  In addition to interest costs, Connecticut and other states with federal loans outstanding for two consecutive years must make additional payments into the Federal Unemployment Tax Act (FUTA) system to pay down the loan principal. Therefore, the FUTA tax rate for calendar year 2013, payable in January 2014, will increase by 0.9%. The additional FUTA tax will be applied to the state’s outstanding loan balance thereby reducing loan principal.   19.  Who should I contact if I want more information? Contact one of our local UI Tax Field Audit Offices: Bridgeport 203-455-2725 Danbury 203-797-4148 Enfield 860-256-3725 Hamden 203-859-3325 Hartford 860-256-3725 Middletown 860-754-5130 New Britain 860-827-6260 New London 860-439-7550 Norwich 860-859-5700 Torrington 860-496-3340 Waterbury 203-437-3400 Wethersfield 860-263-6360 Willimantic 860-423-2689   20.  Where do I send my payment? We encourage employers to use our secure on-line payment system to schedule their special assessment payment.  You may use the following link to access our Tax and Benefits On-Line System: http://www.ctdol.state.ct.us/uitax/LogInIntro.htm After you log in, you may select the button marked Employer Internet Services and follow the link to Electronic Funds Transfer. Payment may also be mailed to: State of Connecticut Department of Labor Dept. 417329 P.O. Box 2905 Hartford, CT 06104-2905 Special Assessment at a Glance