The COVID-19 Pandemic led to an immediate and unprecedented level of unemployment between March 2020 and September 2021 in New York. As such, the State had to borrow funds from the Federal Government in order to meet its Unemployment Insurance Obligations. As of July 2022, the outstanding balance due to federal government stands at $8.1 Billion. New York State law requires that employers that are liable for unemployment insurance must pay an assessment to the state to cover the interest due on these loans.
The New York State Department of Labor (DOL) has begun to mail out notices to employers in July 2022 called an Interest Assessment Surcharge (IAS), which will be used to cover the interest on these loans. The IAS rate does vary from year to year, but for 2022 it will be .23% and based on wages from the 4th Q 2020 to 3rd Q 2021. The notice will look like the below:
The amount due will be in column 2 (415.38 for this notice). Employers should pay their amount -which is estimated to be about 27.60 per employee – when they receive this notice. This amount will NOT be paid by payroll processors (like ADP or Paychex) and will be required to be paid by employers directly like any other bill. The payment due date is September 30, 2022.
The assessments will continue until New York State has repaid the loan, so it may continue in 2023 and 2024. As part of the assessment, NYS has also indicated that they will reduce the employer contribution rate by an average of 22% from 2021 to 2022 and will repay 13% of the loan balance from January 2022 to June 2022.
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Edward McWilliams, CPA
Ed is a Partner in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face.