Michigan Employer Advisor: July 2024

How the UIA Calculates Employer Unemployment Insurance Tax Rate

The Michigan Unemployment Insurance Agency (UIA) sets the tax rates that are assessed on most employers to fund the state’s jobless benefits program.

Tax rates are calculated using three factors: Chargeable Benefits Component (CBC), Account Building Component (ABC), and the Nonchargeable Benefits Component (NBC).

The CBC and the ABC are affected by the employer's payroll and the unemployment benefit charges to their account. Since these components reflect each company’s unique unemployment benefits history, they are known as the experience components. The entire UIA taxing computation is known as experience rating. Generally, employers that have many former workers drawing unemployment benefits have higher tax rates, while employers that have few former workers drawing benefits have lower tax rates.

Employers in the construction industry are the exception to this rule. Their rate in the first two years of operation is that of the average employer in the construction industry. In recent years the average construction rate has ranged from 5.3 percent to 8.1 percent. The UIA announces the annual rate early each year.

The tax rate for employers is calculated using two main factors: The amount an employer has paid in wages to their employees, and the number of employees who have collected unemployment benefits.

How employers can view current tax rates

• Log into MiWAM.
• Click on Recent Items.
• Navigate to the All Letters column.
• Look for UIA Form 1771 Tax Rate Determination (which is usually sent in December).

Here's the formula used the first 3 years

This shows how the tax rate is calculated the first three years a business is liable:

• Year 1: 2.7 percent PLUS 1/3 of CBC.
• Year 2: 2.7 percent PLUS 2/3 of CBC.
• Year 3 and beyond: The employer becomes fully experienced.

The rates in the third and fourth years of liability are partly based on an employer's unemployment insurance experience. This is the employer's history of benefit charges and taxable payroll.

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Business Transfer Can Have Impact on Unemployment Insurance Rates

Selling a business can have implications on unemployment tax obligations. Depending on the percentage of a business being sold, the tax liability and tax rate may be passed onto the new owner.

Michigan law requires that a seller must provide the purchaser with information regarding their unemployment tax liability two days before the close of the sale. A seller is required to provide the buyer with Form UIA 1027, Business Transferor's Notice to Transferee of Unemployment Tax Liability and Rate. The seller can request a summary report of this information by contacting UIA to request Form UIA 1346, Disclosure of Transferor Account.

The Disclosure of Account form can also be requested through the Michigan Web Account Manager (MiWAM). Once logged in, click on UI Tax, Account Services, and then Request Disclosure of Account.

The form will be available in MiWAM the next business day and a copy will be sent by mail. It will include account details from the past five years. It will also detail contributions paid, benefit charges, taxable wages, and tax rates. The form will include your reserve balance and total payroll.

The purchaser should have this information to make an informed decision prior to purchase. 

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Employers Can Use MiWAM to Report Employees' Refusal to Accept Work

Workers who receive unemployment insurance benefits are required to certify that they are physically able and available for full-time work. They must also actively be searching for work while receiving benefits.

An offer of suitable work must be legitimate as stated in the Michigan Employment Security (MES) Act, Subsection 29(6) and must have been made within the past 18 months.

An employer can report through their MiWAM account a job candidate who declines an offer to work. The applicant must have an active unemployment claim for the report to be reviewed by UIA.

There are two ways to make a report. Out-of-state employers, users who do not have a MiWAM account, or employers who do not yet have the applicant’s SSN can use the alternative option to make the report.

Protest for Refusal of Work

• Log in to your MIWAM account.
• Click on the UI Tax link.
• Click on Account Services.
• Under Benefit Services, click on Report Refusal of Offer of Work.
• Follow the steps to report and click to submit when finished.

MiWAM Reporting Alternatives

• If a claimant fails to interview, submit the date, time, and employer name and address of where the interview was to take place.
• Include the claimant’s name, address, and phone number, and Social Security number (SSN).
• Mail the information to:

• Unemployment Insurance Agency
• P.O. Box 169
• Grand Rapids, MI 49501-0169

• Or fax the information to (517) 636-0427

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How TPAs, Employers Can Prepare for UIA's MiUI System Modernization

Employers and Third-Party Administrators (TPAs) will begin to see in September a regular cadence of information on topics related to the UIA’s rollout in 2025 of a new computer system.

For instance, you’ll hear more about the expanded number of file formats available to upload information into MiUI.

To prepare for a smooth transition to MiUI, make sure your contact information is up to date in MiWAM. It's quick and easy to do.

How to update Business Address(es)
If you have Master access to your account, you can change your physical and legal addresses.

1. Have the master user log in to MiWAM.
2. From the homepage, click on Names and Addresses to view or change the physical and/or legal address.
3. A confirmation number will be sent once you complete the address update.

How to update a master user’s email address

1. From the MiWAM homepage, click on Settings.
2. Then, click on Edit.
3. Update the email address and any other profile details, if necessary.
4. Finally, click Save.

UIA will reach out in a number of ways about MiUI, and you’ll want to make sure you get the latest information at the appropriate time.

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Deadline Nears to Submit New WOTC Employer Rep. Declarations Form

A reminder to those who have a Work Opportunity Tax Credit (WOTC) program Power of Attorney that you must turn in Form 9198.

This form from the U.S. Department of Labor is a replacement for the IRS Form 2848. UIA will recognize the Form 2848 through the end of July.

If you don’t submit the new form by the deadline that could jeopardize your status as Power of Attorney.

The new form can be downloaded from the UIA's WOTC webpage or from the U.S. Department of Labor's Employment and Training Administration.

If you have questions, email WOTCUnit@Michigan.gov.