Interest Assessment Surcharge and what you need to know.

tysllpBusiness News, Tax Accounting

Interest Assessment Charge

TYS wanted to answer some questions you might have about the New York State IAS or Interest Assessment Surcharge.

 Just to remind you why the IAS is something you should be aware of, here are some details. 

In March 2020, the federal government passed the CARES Act, creating several pandemic unemployment programs to support out-of-work Americans impacted by the COVID-19 pandemic. As New York State hit unemployment levels not seen since the Great Depression, the Department of Labor would go on to pay more than $110 billion dollars in unemployment and pandemic unemployment benefits between March 2020 and September 2021. As a result of this unexpected emergency, the Unemployment Insurance (UI) Trust Fund was depleted. Like dozens of states around the country, New York State borrowed funds from the federal government to maintain UI and pandemic benefits while the pandemic programs were in effect.

New York State and the Department of Labor are working to rapidly reduce its federal debt by reducing the principal balance both aggressively and intentionally. In fact, NYS DOL has paid back more than $1 billion, or 11%, of its $9.2 billion UI Trust Fund loan.

While New York State prioritizes reducing its federal debt, State law requires contributing employers to pay an annual Interest Assessment Surcharge, or IAS, on the federal loan. Beginning in July 2022, employers who make unemployment insurance contributions will be notified of the 2022 IAS rate (.23%) along with information about how to pay this annual charge (about $27.60 per employee). Unless the Federal government chooses to abate all or part of the interest incurred or the principal balance amount is repaid with no more interest accrued, businesses will be required to make annual IAS payments until all interest has been fully paid off.

When is this due? September 30th, 2022

NOTE: If assessment not paid on-time this may impact your annual credit on the IRS tax filing form 940

 How can businesses pay their IAS?

  • You can write a check payable to “NYS Unemployment Insurance” and send it to “NYS Unemployment Insurance, P.O. Box 4301, Binghamton, New York 13902-4301.

Please note if you received a notice for the New York Interest Assessment Surcharge (IAS) the business will be responsible for remitting payment directly to the state. For more information, please visit the New York State Department of Labor website: Interest Assessment Surcharge | Department of Labor (ny.gov)

 Frequently Asked Questions

What is the interest assessment surcharge and why is it being assessed?

Due to the global COVID-19 Pandemic, the Unemployment Insurance (UI) Trust Fund ran out of funds to pay claims filed by unemployed workers. As a result, New York State borrowed funds from the federal government to maintain unemployment insurance benefits while the pandemic unemployment programs were in effect. The current balance of this loan is $8.1 billion. While the debt from these federal loans is being reduced at a rapid rate, State law requires that New York State businesses pay the interest on the federal loan – this payment is the Interest Assessment Surcharge (IAS). New York State businesses owe the federal government $162 million in interest for 2022, which must be paid by September 30, 2022. Unless the Federal government chooses to abate all or part of the interest incurred, businesses will be required to make IAS payments until all interest has been fully paid off.

Are all businesses required to pay the IAS?

All businesses that pay unemployment insurance (UI) contributions to the State are liable for the IAS. If a business owes less than $1.00, they will not receive an IAS bill.

How is IAS calculated?

The IAS for businesses is calculated using the wages subject to contributions for the current payroll year (the fourth quarter of 2020 through the third quarter of 2021) and multiplying those wages by the IAS rate of .23%. That amounts to about $27.60 per employee. The IAS will vary from year to year depending on the outstanding loan balance, wages subject to contributions, and the federally prescribed interest rate.

Will a business’s UI experience rating increase as a result of IAS?

No. The IAS does not affect a business’s experience rating.

When are IAS payments due?

Federal interest payments are due annually on September 30, unless the federal government suspends the accrual of interest, or the principal balance amount is repaid with no additional interest accrued. IAS is subject to the same collection processes as normal contributions, including, but not limited to, legal actions to enforce a debt. No extensions can be granted as the payment due to the federal government must be on time.

What if I did not receive an IAS bill or have questions regarding the IAS bill?

Businesses with questions about IAS may call NYS DOL’s Employer Hotline at 1-888-899-8810. Select Option One for the Main Menu, and then Option One for the Employer Accounts Adjustment Section of the Unemployment Insurance Division. Additional information is available at on.ny.gov/ias.

How can businesses pay their IAS?

Businesses may pay the IAS electronically when e-Filing their 2Q22 NYS-45 return.

To create or access your UI Online Services account, go to https://on.ny.gov/employersonlineservices. If you don’t pay the IAS with your second quarter e-File return, you can write a check payable to “NYS Unemployment Insurance” and send it to “NYS Unemployment Insurance, P.O. Box 4301, Binghamton, New York 13902-4301.

For help figuring this all out contact us at info@tysllp.com