Grant Awards $112,035 to the Unemployment Insurance Agency

SEPTEMBER 16, 2005 – Michigan has received one of the largest grants offered by the U.S. Department of Labor (USDOL) to help states detect and prevent unemployment insurance (UI) tax rate maneuvers, known as SUTA Dumping.

“Michigan is receiving $112,035 to train staff and to implement specially developed software that will help us to eliminate tax plans that some employers are using to avoid paying their fair share of state unemployment taxes,” David Plawecki, a deputy director with Michigan’s Department of Labor & Economic Growth, reported.

SUTA (state unemployment tax act) Dumping typically occurs when a business transfers payroll out of an existing company or organization to a new or different organization solely or primarily to reduce their unemployment taxes.

SUTA Dumping is an escalating problem, costing the state’s unemployment insurance trust fund between $62 and $95 million a year in lost tax revenues.

“The federal grant will come to the Unemployment Insurance Agency (UIA) and will be used to integrate newly developed software, enabling us to identify employers who may be engaged in SUTA Dumping,” UIA Director Sharon Bommarito said.  “The money will also be used to further train agency staff who enforce the state’s anti-SUTA Dumping laws.”

Bommarito said the agency has already received the software and expects to have it operational within the next few weeks.

The USDOL had the software developed for all states to use.  The department also awarded nearly $5 million in grants to all 53 states and territories to help them with their SUTA Dumping detection and prevention efforts.  Ten states, including Michigan, received the top grant of $112,035.