Tax assessment issued to pay jobless loan interest
June 28, 2013
Business owners statewide will get a letter in the mail next week telling them how much they have to pay to cover the interest Nevada owes the federal government on loans taken to cover unemployment benefits this past year.
Employment Security Division Administrator Renee Olson said the notices will inform those businesses they must make the payment to the state by the end of July so the state can pay the interest bill by Sept. 30.
The interest is owed on loans totaling about $573 million as of this week and, this year, comes to about $17 million.
Assembly Minority Leader Pat Hickey, R-Reno, questioned whether small businesses would have enough time in that one-month window to pay what could be a high assessment bill.
But she and David Schmidt of ESD emphasized the tax is much lower than many businesses think.
First, the tax is based on taxable wages, not total wages. Typically, Schmidt said taxable wages might be 57 percent of a business’s total wages so a company with total wages of $100,000 would owe the assessment on taxable wages of $57,000.
Second, he said some businessmen are calculating the 0.08854 percent assessment incorrectly, multiplying their payroll by that number instead of remembering that, since it’s a percentage, that would get them to an assessment 100 times what they actually owe, in the sample case, $5,047.
Instead, Schmidt said, they have to add two more zeroes and multiply their payroll by 0.000854. Done that way, the company would actually owe a total of just $50.47.
Olson said ESD doesn’t believe the assessments will be onerous to any businesses.
She said the special assessment will remain in place, charged annually, until the state’s unemployment trust loans are all paid off.
To pay them off, lawmakers this session passed legislation allowing ESD and the state treasurer’s office to bond for that debt and pay off the loans in a lump sum. That saves the state millions because the interest rates in the bond market are much lower than the rate the federal government charges on its loans.
Officials hope to sell those bonds soon and eliminate the loan debt after which, the special assessment goes away, Olson said.