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Contributions or Reimbursements

Contributions or Reimbursements

There are two methods for taxing employers for unemployment insurance.

Contributing employers (Mostly private, for-profit businesses)

  • Each calendar quarter, a contributing employer must file their Employer's Quarterly Wage/Tax Report online.  Employers use the report to compute and pay their unemployment insurance tax.
  • The tax is based on a formula that uses the employer's past experience with the unemployment of its workers, and the size of its payroll as a measure of its potential risk of unemployment.

Reimbursing employers (Non-profits organizations and government units)

  • Instead of paying quarterly taxes, they reimburse UIA dollar-for-dollar for any UI benefits paid to former employees.
    • A non-profit organization can file a written request with the UIA to become a reimbursing employer. 
    • A governmental unit is automatically a reimbursing employer, unless it requests, in writing, to be a contributing employer. 

Non-Profits: Switching from Contributing to Reimbursing

A non-profit organization can elect as reimbursing or contributing employer during the initial registration. If this is incorrectly set up, the non-profit organization must notify UIA within 30 days of being found to be a liable employer, or if they are an existing employer with the intent to change its status, they can request change in status within 30 days before the beginning of the calendar year in which the change will be effective.

  • UIA law allows Indian tribe or tribal unit as reimbursing employer but must state during the initial registration if electing as reimbursing or contributing employer.
  • A reimbursing employer does not pay quarterly taxes to the UIA . But if unemployment benefits are paid to former employees, the reimbursing employer must repay UIA , dollar-for-dollar, for unemployment benefits paid out.
  • Reimbursing employers on or after December 21, 1989 (Nonprofits, Indian Tribes, or Tribal Units), if gross annual payroll/wages are equal to or exceed $100,000 in a calendar year (7/1 through 6/30) they are subject to a 4 percent security in the form of surety bond or letter of credit (gross annual payroll x 4%).