Attention Baron Payroll clients:
Be on the lookout for a letter in your mailbox from the New York State Department of Labor with your 2023 unemployment rate. It’s helpful if you email us a scanned copy of this letter so we can adjust your unemployment tax rate accordingly.
Why do you get this letter?
For all businesses in New York, your unemployment rate varies from year to year based upon how much money you contributed in tax during the prior year and how much money you paid out in unemployment claims. Sometimes, the state has an across the board rate increase for all businesses.
It’s also important to note that the New York State Department of Labor (“NYS DOL”) is telling you in February what your new rate is, retroactively back to January first.
So, here’s the bottom line.
If your unemployment rate went up, Baron will have to collect from you and pay the additional tax due retroactively back to January 1st. And conversely, if your rate went down, Baron will refund your overpayment of unemployment tax already collected.
Unfortunately for most employers, the rates go up.
How did the NYS DOL calculate your rate and can you appeal it?
Essentially, every employer has their own “bank account” with New York State Unemployment.
At the beginning of every year, the NYS DOL looks at the balance in your bank account and compares it to the beginning of the previous year.
If your bank account balance went down, your tax rate will go up.
Conversely, if your bank account balance went up, your tax rate should go down.
The only reason why we would say “should” is because there may be an across the board increase or assessment.
It's also important to know that the NYS DOL will not provide you with your old rate on this letter.
So, if you think something is wrong and your rate is too high, you must contact the NYS DOL to appeal.
How much will this cost you?
Hopefully nothing, if your rate stayed the same as last year or went down.
Chances are, however, that’s not the case.
Depending upon how much your rate went up, and how many employees you have on payroll, the cost can be anywhere from a few hundred dollars to a few thousand dollars.
If your unemployment rate went up, Baron will calculate the amount you owe, collect from you, and pay the additional tax due for you.
As part of our standard process we will run a separate reconciliation payroll for your company to ensure that you didn’t pay too much or too little. So, please keep your eye out for this extra reconciliation payroll!
If you found this article helpful, here are some others you might like:
- Why are my W2 Wages Lower Than my Salary?
- How to Choose the Best Payroll Company for Your Small Business
- The Pros and Cons of Paying Employees with Payroll Paycards
- Why Employee Printback Checks are Good for Your Business
- How Will the New York State Secure Choice Retirement Savings Program Impact Your Business
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Let’s talk shop.
