Unemployment insurance taxes due April 30; Delinquent after May 1; Rate increased for all employers

The first quarterly tax payment for unemployment insurance taxes is due April 30 and delinquent after May 1.

Employers should have been able to download their 2021 unemployment insurance rate via the Alabama Department of Labor website in either the first or second week of February. Unemployment compensation taxes are individual to each business based on a formula that takes into account wages paid; the amount of unemployment among current and former employees; the average duration and cost of unemployment benefits paid to claimants over a three-year period; as well as shared costs, which all employers pay.

To find your rate, go to https://www.labor.alabama.gov/eGov/ and login. Once logged in, go to Tax Rate / Advanced Payment Rate Notice. Enter your account number/FEIN when prompted, then click 2021.

The Alabama Department of Labor recommends all employers revisit the portal linked above for the most current and accurate information, especially if you last checked it in late January or early February.

For 2021, all employers will pay a half percent (.5%) in shared costs. Shared costs when added to the .65% experience rate the majority of Alabama employers currently pay, means most will have a 1.15% unemployment insurance tax rate for all of 2021. Seventy percent of Alabama employers are at the lowest of the state’s 22 unemployment tax experience ratings. The 1.15% rate is the minimum rate under Schedule D. View ADOL Schedule D rate chart for 2021.

In September 2020, the department had estimated the shared costs would be 1.3% with a 1.95% minimum rate. An infusion of $385 million ($300 million in September 2020 and $85 in January 2021) from federal CARES Act funding to the Unemployment Insurance Trust Fund, spared Alabama businesses from a more than 500% tax hike in 2021.

The Alabama Retail Association first communicated with its members about the anticipated rate increase in early September 2020.

Your association knows how hard you work to avoid paying more unemployment taxes,” said Alabama Retail Association President Rick Brown. “Your unemployment insurance tax bill is based on several factors; some you control and some you don’t. This is one you don’t.”

Beware of unemployment compensation fraud
The Internal Revenue Service has noted an uptick in identify theft related to unemployment benefit claims. “Scammers took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims,” the IRS said.

Meanwhile, the Alabama Department of Labor has created a place to report an employee who is receiving unemployment benefits while also working and collecting a paycheck from your business, another form of fraud that also can drive up costs for a business. See flow chart below on how to report fraud to the ADOL.