Interest Assessment Surcharge (IAS) in 2012: Frequently Asked Questions
- Q: Why is the IAS being assessed?
- Q: What happens if the interest is not paid to the federal government?
- Q: What is the section of the law which imposes the IAS?
- Q: Are all employers required to pay the IAS?
- Q: How was my IAS calculated?
- Q: Does the IAS amount being assessed in 2012 differ from the 2011 IAS amount assessed?
- Q: Will my tax rate increase as a result of IAS?
- Q: When is my payment of the IAS due? Can I get an extension?
- Q: Who should I make my check payable to and where do I send the payment?
- Q: Is this a one-time billing and what happens if I do not pay my IAS?
- Q: What if I did not receive an IAS bill or have questions regarding the IAS bill?
Q: Why is the IAS being assessed?
A:
Due to the high rate of unemployment, New York, as well as many other states, had to borrow money from the federal government in order to meet unemployment insurance (UI) benefits obligations. Normally, there should be sufficient revenues generated from quarterly UI employer tax collections to repay the federal loan in time to avoid interest charges. As a result of the recession, there have been insufficient revenues from unemployment insurance (UI) taxes to satisfy the loans and to avoid the interest assessment. In 2011, New York initiated the interest assessment surcharge process to collect sufficient revenues to pay the interest bill. New York owes approximately $102 million in interest for 2012, which must be paid by September 30th. In order to pay the interest due for 2012 on these federal loans, New York State is required by state law to assess a temporary charge on employers called the Interest Assessment Surcharge, or IAS.
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Q: What happens if the interest is not paid to the federal government?
A:
Failure to pay the interest due can have severe consequences. New York's Unemployment Insurance Program could lose its federal certification, which would result in employers in the state losing eligibility for a credit of up to 5.4% against the Federal Unemployment Tax Act (FUTA) tax. This would cause a very large and sudden spike in employer payroll taxes. In addition, the federal government can withhold funds for NY that will be needed to administer the state's Unemployment Insurance Program.
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Q: What is the section of the law which imposes the IAS?
A:
The section of the State Labor Law is Article 18, Title 6, Section 581-d. This can be found by visiting our website @ http://www.labor.ny.gov/. Employers were previously charged an IAS under this law in 2003, 2004, 2005 and 2011.
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Q: Are all employers required to pay the IAS?
A:
All employers who pay unemployment insurance (UI) tax to the State are liable for the IAS. State and local government and not-for-profit employers who self-insure for UI purposes are not liable for the IAS
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Q: How was my IAS calculated?
A:
Your IAS was calculated using the taxable wages for the current payroll year (the fourth quarter of 2010 through the third quarter of 2011) and multiplying those wages by the IAS rate of .15%. The maximum amount that most employers will be assessed is $12.75 per employee.
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Q: Does the IAS amount being assessed in 2012 differ from the 2011 IAS amount assessed?
A:
Yes. The Federal Interest rate on these loans is significantly lower this year, reducing the 2012 IAS rate to .15% from .25% in 2011. This reduces the maximum amount that most employers will be assessed from $21.25 per employee, in 2011, to the $12.75 per employee in 2012.
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Q: Will my tax rate increase as a result of IAS?
A:
No. IAS does not affect an employer's experience rating account.
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Q: When is my payment of the IAS due? Can I get an extension?
A:
Payment is due 30 days from the date of the billing notice. No extensions can be granted as the federal due date must be paid timely.
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Q: Who should I make my check payable to and where do I send the payment?
A:
Checks should be made payable to: NYS Unemployment Insurance and sent to: NYS Unemployment Insurance, P.O. Box 4301, Binghamton, NY 13902-4301.
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Q: Is this a one-time billing and what happens if I do not pay my IAS?
A:
IAS will be billed annually until the loans to the federal government have been paid. IAS is subject to the same collection processes as normal contributions. This would include legal actions to enforce the debt.
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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 Accounts Adjustment Section of the Unemployment Insurance Division at 1-888-899-8810 or go to our agency website www.labor.ny.gov.
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