Wednesday, September 2, 2015

Michigan UI Taxable Wage Base to Decrease

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Michigan’s unemployment insurance (UI) taxable wage base will decrease $500 beginning with the third quarter of 2015. The UI taxable wage base is moving to $9,000 from $9,500, and this is an unusual move as most states do not split their wage bases mid-year.

This decrease means employers will pay less in unemployment insurance taxes. The change will be applicable to unemployment insurance returns due by October 26, 2015. The due date usually is October 25, but because that date falls on a Sunday this year an extra day was granted. This decrease only applies to refunds asked for in the third quarter. There will be no refund for UI taxes paid in the first and second quarters of 2015.

The wage base decrease applies to most employers but not all of them. Employers must be a contributing employer. Employers also must not be delinquent in the payment of UI contributions, penalties, or interest as of August 28, 2015. This means employers that have a UI balance of at least $25. This deadline was originally August 15 but was later extended to August 28 due to an overwhelming response from employers.

Reimbursing employers will continue to use the higher $9,500 wage base. A reimbursing employer is one that only pays for benefits charged to its account. Examples include nonprofit organizations, government units, schools, and Native American tribes treated as charitable organizations by the IRS.

Whether or not the wage base will remain at $9,000 will depend on the health of the Michigan UI trust fund as determined by legislation enacted in 2011. If the trust fund reaches a “healthy amount” of at least $2.5 billion for two consecutive quarters then the wage base will remain at $9, 000. If the trust fund falls below this amount, or is projected to fall, the wage base will revert back to $9,500.

Read PayState Update Issue No. 17, Vol. 17 for more details on the decrease. If you have any immediate questions, call UIA’s Office of Employer Ombudsman at 855-484-2636.