Chamber reminds of DIR letter
Published 10:40 pm Monday, August 22, 2011
The Pike County Chamber of Commerce board of directors has sent its members a reminder of the Department of Industrial Relations’ (DIR) Assessment Due letter that requires immediate attention before Sep. 9, 2011.
“Each employer is being assessed 0.07 percent of their taxable wages for the year immediately preceding the calendar year in order to pay back interest on funds borrowed for unemployment compensation,” said Kathy Sauer, Chamber president. “We are reminding employers to pay attention to this letter and respond accordingly.”
Due to high levels of unemployment over the last several years, it has been necessary for the sate to borrow money for the Unemployment Compensation Trust Fund in order to pay unemployment compensation benefits.
According to information released by the DIR, from 2007 through 2010 more was paid in unemployment benefits than was collected in unemployment compensation taxes. The Trust Fund balance went to zero an, as in the case of more than 30 other states, it was necessary for the Alabama DIR to borrow from the US Treasury to pay benefits.
Through the taxes paid by employers, most of these funds have been repaid and the DIR is projecting a positive balance early in 2012.
Federal law does not allow any sate to pay interest expenses with unemployment tax revenues. This expense must be assessed to employers. Each employer is assessed 0.07 percent of their taxable wages for the year immediately preceding the calendar year when interest payment became necessary. The employer’s assessment is calculated for taxable wages for the calendar year 2010.
Sauer said that, for small business owners, this assessment might be minimal. Large employers will be faced with, perhaps, a significant, amount that they do not normally pay.
Troy Regional Medical Center is one of Pike County’s largest employers. Teresa Grimes, TRMC administrator, said the hospital has been working toward calculating its assessment and is in compliance. The hospital’s assessment is $1,630.
Although the assessments were not a budget items, employers are accepting the challenge of the unexpected expense as a sign of the times, Sauer said.