Bill Text: IA SSB3182 | 2023-2024 | 90th General Assembly | Introduced

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Bill Title: A bill for an act relating to unemployment insurance taxes on employers.

Spectrum: Committee Bill

Status: (Introduced) 2024-02-19 - Subcommittee: Dickey, Dotzler, and Schultz. [SSB3182 Detail]

Download: Iowa-2023-SSB3182-Introduced.html

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Senate Study Bill 3182 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON DAWSON)
A BILL FOR
An Act relating to unemployment insurance taxes on employers.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. Section 96.1A, subsection 36, Code 2024, is
amended to read as follows:
36. “Taxable wages” means an amount of wages upon which
an employer is required to contribute based upon wages which
that have been paid in this state during a calendar year to
an individual by an employer or the employer’s predecessor ,
in this state or another state which extends a like comity to
this state, with respect to employment , upon which the employer
is required to contribute, which equals the greater of the
following:
a. Sixty-six and two-thirds Thirty-three and one-third
percent of the statewide average weekly wage which that was
used during the previous calendar year to determine maximum
weekly benefit amounts, multiplied by fifty-two and rounded to
the next highest multiple of one hundred dollars.
b. That portion of wages subject to a tax under a federal
law imposing a tax against which credit may be taken for
contributions required to be paid into a state unemployment
compensation fund.
Sec. 2. Section 96.7, subsection 2, paragraph c,
subparagraphs (1) and (2), Code 2024, are amended to read as
follows:
(1) A nonconstruction contributory employer that is newly
subject to this chapter shall pay contributions at the rate
specified in the twelfth fourth benefit ratio rank but not less
than one percent until the end of the calendar year in which
the employer’s account has been chargeable with benefits for
twelve consecutive calendar quarters immediately preceding the
computation date.
(2) A construction or landscaping contributory employer,
as defined under rules adopted by the department pursuant to
chapter 17A , which that is newly subject to this chapter shall
pay contributions at the rate specified in the twenty-first
ninth benefit ratio rank until the end of the calendar year in
which the employer’s account has been chargeable with benefits
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for twelve consecutive calendar quarters.
Sec. 3. Section 96.7, subsection 2, paragraph d,
subparagraph (1), Code 2024, is amended to read as follows:
(1) The current reserve fund ratio is computed by dividing
the total funds available for payment of benefits, on the
computation date or on August 15 following the computation
date if the total funds available for payment of benefits is a
higher amount on August 15, by the total wages paid in covered
employment excluding reimbursable employment wages during the
first four calendar quarters of the five calendar quarters
year immediately preceding the computation date. However,
in computing the current reserve fund ratio, beginning July
1, 2007, one hundred fifty million dollars shall be added to
the total funds available for payment of benefits on each
computation date.
Sec. 4. Section 96.7, subsection 2, paragraph d,
subparagraph (2), subparagraph division (a), Code 2024, is
amended by striking the subparagraph division.
Sec. 5. Section 96.7, subsection 2, paragraph d,
subparagraph (2), subparagraph division (b), Code 2024, is
amended by striking the subparagraph division and inserting in
lieu thereof the following:
(b) If the current reserve fund ratio:
Equals or But is The contribution rate
exceeds less than table in effect shall be
_______________________________________________________________
—— 0.50 A
0.50 0.90 B
0.90 1.30 C
1.30 —— D
Sec. 6. Section 96.7, subsection 2, paragraph d,
subparagraph (2), subparagraph division (d), Code 2024, is
amended by striking the subparagraph division and inserting in
lieu thereof the following:
(d) Each employer qualified for an experience rating
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shall be assigned a contribution rate for each rate year
that corresponds to the employer’s benefit ratio rank in the
contribution rate table effective for the rate year from the
following contribution rate tables. Each employer’s benefit
ratio rank shall be computed by listing all the employers by
increasing benefit ratios, from the lowest benefit ratio to the
highest benefit ratio and grouping the employers so listed into
nine separate ranks containing as nearly as possible fourteen
and twenty-nine hundredths percent of the total taxable wages,
excluding reimbursable employment wages, in the first six
ranks, and four and seventy-six hundredths percent of the total
taxable wages, excluding reimbursable employment wages, in
ranks seven, eight, and nine, paid in covered employment during
the four completed calendar quarters immediately preceding the
computation date. If an employer’s taxable wages qualify the
employer for two separate benefit ratio ranks, the employer
shall be afforded the benefit ratio rank assigned the lower
contribution rate. Employers with identical benefit ratios
shall be assigned to the same benefit ratio rank.
Approximate Contribution Rate Tables
Benefit Cumulative
Ratio Taxable
Rank Payroll Limit A B C D
__________________________________________________________
1 14.29% 0.00 0.00 0.00 0.00
2 28.58% 0.40 0.30 0.10 0.10
3 42.87% 1.20 0.80 0.40 0.20
4 57.16% 2.10 1.40 0.60 0.30
5 71.45% 3.60 2.40 1.10 0.50
6 85.74% 5.40 4.10 1.90 0.90
7 90.50% 5.40 5.40 4.20 2.00
8 95.26% 5.40 5.40 5.40 2.80
9 100.00% 5.40 5.40 5.40 5.40
EXPLANATION
The inclusion of this explanation does not constitute agreement with
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the explanation’s substance by the members of the general assembly.
This bill modifies the definition of “taxable wages” for
purposes of unemployment insurance taxes on employers by
eliminating the wages paid to an employee from another state
from the calculation of wages upon which an employer is
required to contribute to the unemployment compensation fund
(fund) when the other state extends a like comity (reciprocity)
to Iowa for employment purposes.
Under current law, the calculation of taxable wages upon
which an employer is required to contribute to the fund is
the greater amount of the two amounts calculated pursuant to
paragraphs “a” and “b” under Code section 96.1A(36). The bill
changes the calculation of one these amounts under paragraph
“a” by reducing the percentage of statewide average weekly wage
used in the calculation from 66.66 percent to 33.33 percent
of the statewide average weekly wage used during the previous
calendar year which is then multiplied by 52 and rounded to the
nearest $100 to determine maximum weekly benefit amounts.
The amount in paragraph “a” as calculated under the bill
would be the amount used to calculate taxable wages upon which
an employer is required to contribute to the fund if that
amount exceeds the amount in paragraph “b” under Code section
96.1A(36).
The calculation of the unemployment contribution rate each
year is a dynamic calculation dependent upon the calculation
of the current reserve ratio, the benefit ratio rank, and
the contribution rate table in effect for the rate year.
The bill changes the current reserve ratio calculation, the
number of benefit ratio ranks, the contribution rates, and the
contribution rate table.
The current reserve ratio (calculation of available benefit
amount in fund) determines the contribution rate table in
effect for the rate year following the computation date. The
bill changes the computation of the current reserve fund
ratio in Code section 96.7(2)(d)(1) by basing the calculation
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of the ratio on the preceding year rather than the previous
five calendar quarters, and strikes the requirement that $150
million be added on the reserve ratio computation date to the
total funds available for benefits. The bill also strikes the
computation of the highest cost-benefit ratio and removes the
ratio from the computation of the current reserve ratio.
The bill modifies the contribution rate table by reducing
the number of possible rate tables that could be in effect
for the rate year from eight contribution rate tables to four
contribution rate tables. Under the bill and current law, only
one contribution rate table may be in effect per rate year. In
reducing the number of possible contribution rates tables from
eight to four, the bill also changes the numbered contribution
rate designations to lettered contribution rate designations.
Under current law, there are 21 benefit ratio ranks in the
contribution table. The benefit ratio is a calculation based
upon the average number of unemployment benefits charged to
an employer over previous calendar quarters. The higher the
benefits charged to an employer, the higher the benefit ratio
rank the employer receives. The bill reduces the number of
benefit ratio ranks from 21 to 9.
Under current law, each of the 21 benefit ratio rank
constitutes 4.76 percent of total taxable wages. The bill
groups the benefit ratio ranks differently by separating each
of the first six benefit ratio ranks by 14.29 percent of total
taxable wages, and separates the last three benefit ratio ranks
by 4.76 percent of total taxable wages.
Under current law, the highest contribution rate that
corresponds with the highest benefit ratio rank is 9.0 percent.
Under the bill, the highest contribution rate that corresponds
with the highest benefit ratio rank is 5.40 percent.
As a result of the bill, each employer will be assigned one
of the nine new benefit ratio ranks that corresponds with one
of the four new lettered contribution rate designations in
effect for the rate year to determine the contribution rate for
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the year.
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