October 7, 2013
In an effort to reduce the burden of unemployment insurance on local businesses, South Dakota is continuing to work on proposed legislation that could reduce UI tax rates, according to The Rapid City Journal. In addition to reducing rates, the proposal also suggests holding the wage base for UI at $14,000, meaning businesses would continue to pay UI on the first $14,000 earned for each employee. The proposed changes would take place beginning in 2015.
Proposal would save businesses millions
The executive director for the South Dakota Retailers Association, Shawn Lyons, said in an interview with The Rapid City Journal that the state legislature appears willing to hold the wage base until the Obama Administration requires moving it up to the $15,000-level. Combined with reducing the reserve ratios, the proposal could save businesses as much as $11 million by the end of 2015.
The news is good for South Dakota retailers and a relief given the UI saga that is playing out in other states, such a California. States that borrowed large amounts of federal money to pay UI are now forced to raise UI rates on employers to pay down debts that have been outstanding for two years or longer. According to Investors Business Daily; California, Ohio, New York, North Carolina and Indiana all have over $1 billion in liabilities, with California hovering around $9 billion. The states all suffer from higher than average unemployment rates as well, which required them to seek large amounts of federal money. Rates continue to go up for employers in the state UI system until the loans are repaid, which could take years for some states.
Nonprofits have other reduction options
While many private entities find themselves at the mercy of increasing UI rates, nonprofit and local governmental organizations can exercise a cost saving option. Tax code allows such organizations to become reimbursing employers and pay back to the state only what is actually paid out to employees.
Groups such as First Nonprofit Companies help nonprofits join a group of over 1,000 other eligible organizations in opting out of the state UI system. Just like the UI rates for private employers, the rules regarding self-reimbursement vary from state to state so working with a company such as First Nonprofit can help nonprofits and governmental entities realize maximum savings.
For information on how your organization can cost-effectively meet its unemployment insurance needs, contact First Nonprofit Companies at FNCUI@firstnonprofit.com or visit www.firstnonprofitcompanies.com.
Ready to chat? Get in touch today to request a no-obligation savings evaluation.
Working with Marshal Whittey at First Nonprofit has been a great experience. He handles our request as a priority and goes above and beyond to resolve any issues we have in a timely manner. Marshall follows through to the end and ensures our needs are met. He has been a great resource for LSC and our “go to” for any tax questions we may have. With LSC transitioning several facilities into one federal tax identification number, First Nonprofit was able to assist and provide guidance with best practices resolving claims to each entity. Additionally First Nonprofit provided knowledge (information materials) and one on one training to HRS group with best practices to handle claims state adjudicated, fraudulent claims, and appeals. And processing information in the First Nonprofit [unemployment claims] system allows for timely information can be collected.
My experience with FNP has been wonderful. Unemployment in general is quite confusing and FNP has simplified the process for us. Everyone we have reached out to or worked with has been very helpful and follows up to be sure we understand the information. I am so happy we made the switch to FNP!
First Nonprofit smoothed the unemployment perils for our organization during Covid. Without the ability to cap our UI exposure, we would not have been able to weather the storm. The program worked perfectly and we have come out of the pandemic ready to forge on. Thanks FNP!
My experience with the FNP has been fantastic. The idea of setting funds aside for the unemployment tax liability is a bedrock for nonprofit organizations like mine, namely ASHBA; what is even more advantageous is having the FNP as a custodian of those funds. 100% recommended!
I would like to comment on my experience with FNP….to date our District has saved $1,000’s of dollars by being enrolled in the First Nonprofit program. My only regret is that we did not know about this method of paying unemployment tax years ago….as I had figured about five years
ago, had we enrolled 15-20 years ago, we could have saved our small school district upwards of $500,000 in payments to IDES. Also we would have had a pretty hefty sum of money in our Reserve Account. Thankfully I attended a workshop hosted by First Nonprofit back in 2015 which got the ball rolling!
I have worked with the First Non-Profit Team for many years, and I appreciate the quick response and care that Cecilia and the team provides anytime I have questions. While there are other providers that may provide like services, First Nonprofit will always be my first choice! I appreciate you!
First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.
Luckily for us, our interactions regarding any issues with staffing has been very minimal! I can say that all other interactions with regards to billing, 941 reporting, etc. have been extremely pleasant, accommodating and easy to work with. Kim Ghanayem is always prompt, professional and friendly. Thank you so much!