Q: What is the Interest Assessment Surcharge and why is it being assessed?
A: Due to the economic downturn in 2008 and 2009, the Unemployment Insurance Trust Fund did not have enough funds to pay for claims filed by unemployed workers. As a result, New York State borrowed $3.5 billion from the federal government, on behalf of employers, to cover the difference. The debt from these federal loans is being reduced at a rapid rate due to the Governor’s Unemployment Insurance Reform legislation, economic development policies, and the improved economy. While the loan balance has been paid back to the federal government, State law requires that New York State employers pay the interest on the federal loan that was in place during this current year – the Interest Assessment Surcharge (IAS). New York State employers owe the federal government $20.6 million in interest for 2015, which must be paid by September 30, 2015. The maximum amount that most employers will be assessed in 2015 is $0.93 per employee compared to $5.95 per employee in 2014. In addition, more than 123,000 employers that have an amount due of less than $1.00 will not receive an IAS bill at all.
Q: What happens if the interest is not paid to the federal government?
A: Failure to pay the interest due can have severe consequences. Employers could see an immediate increase in their current federal FUTA rate of 1.8% to 6.0%, an increase of more than double the current amount due from each employer in their federal unemployment (FUTA) next year. The federal government could also withhold funds needed to administer New York State’s Unemployment Insurance Program for failing to make these interest payments.
Q: What is the section of the law which imposes the IAS?
A: Article 18, Title 6, Section 581-d of the New York State Labor Law requires the State to assess employers for interest owed to the federal government. Read the law here.
Q: Are all employers required to pay the IAS?
A: All employers who pay unemployment insurance (UI) contributions to the State are liable for the IAS. As per our normal procedure, if an employer owes less than $1.00, they will not receive an IAS bill.
Q: How was my IAS calculated?
A: Your IAS was calculated using the wages subject to contributions for the current payroll year (the fourth quarter of 2013 through the third quarter of 2014) and multiplying those wages by the IAS rate of .009%. As mentioned above, the maximum amount that most employers will be assessed is $0.93 per employee compared to $5.95 per employee in 2014. The IAS rate for 2015 was reduced 84% compared to 2014.
Q: When is my payment of the IAS due? Can I get an extension?
A: The IAS may be paid electronically with the electronic filing of your quarterly return, on or before October 31, 2015 or you can send a paper check to the address shown on the notice. No extensions can be granted because the payment due to the federal government must be timely.
Q: Who should I make my check payable to, and where do I send the payment?
A: If you do not make electronic payment with your quarterly Efile, return checks should be made payable to "NYS Unemployment Insurance" and sent to "NYS Unemployment Insurance, P.O. Box 4301, Binghamton, New York 13902-4301."
Q: Is this a one-time billing, and what happens if I do not pay my IAS?
A: IAS is billed annually. It is very likely this will be the final year you will be required to pay an IAS on the existing loan. IAS is subject to the same collection processes as normal contributions, including, but not limited to, legal actions to enforce a debt.
Q: What if I did not receive an IAS bill or have questions regarding the IAS bill?
A: If you have any questions, please call the Employer Hotline at 1-888-899-8810 and select option 1 for the Employer Accounts Adjustment Section of the Unemployment Insurance Division. Or, go to our agency website http://www.labor.ny.gov.
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