This section gives information on New Developments in unemployment tax.

2005 Law Change

The SUTA Dumping Prevention Act of 2004 was passed by the United States Congress and signed by the President in August 2004. This law requires each state to enact laws to prevent employers from inappropriately lowering their unemployment insurance tax rates by manipulating experience rating systems, a practice known as “SUTA Dumping”. During the 2005 legislative session, the Missouri General Assembly passed and the Governor signed House Bill 500 & 533, which prohibits SUTA Dumping in Missouri. This law became effective January 1, 2006.

288.110 – SUTA Dumping– Mandates transfers of experience from one employer to another employer in certain situations and prohibits transfers of experience in others. It also requires the Division to impose substantial penalties on those who knowingly engage in SUTA dumping activities and requires the Division to establish procedures to identify transfers for this purpose.

2004 Law Changes

On May 16, 2004, the Missouri General Assembly passed and the Governor signed House Bill 1268 & 1211, making several law changes relevant to Missouri unemployment insurance tax. Attached is a summary of the unemployment insurance tax law changes passed in the 2004 legislative session.

288.036.2 - Taxable Wage Base - The taxable wage base for calendar year 2005, 2006 and 2007 will be $11,000. The wage base will be $12,000 for 2008 and $12,500 for 2009. For 2010 and subsequent years, the wage base will be increased by $1,000 or decreased by $500 based on the balance in the Unemployment Trust Fund, but will not be less than $7,000 or more than $13,000.

288.110 - Acquisition Language - When acquisitions take place on a day other than the first day of a calendar quarter the successor employer's existing rate shall remain in effect for the remainder of the current quarter and any new rate shall be effective the first day of the next calendar quarter.

288.120 - Maximum Rated Employer Surcharge - Employers who have been taxed at the maximum rate pursuant to §288.120 during calendar years 2003 and 2004 and remain at the maximum rate in 2005 shall have a surcharge of .25% (twenty-five one-hundredths) added to their contribution rate in calendar year 2005. In the event that an employer remains at the maximum rate for a third or subsequent year, an additional surcharge of one-quarter percent shall be added each year to the annual rate calculation up to one percent. If an employer continues to remain at the maximum rate, an additional surcharge of one-half percent shall be added. In no case shall the surcharge exceed one and one-half percent in any given year.

288.121 - Percentage of Increase/Contribution Rate Adjustment - Employers taxed at the maximum rate will have their rate increased by 40% in 2005, 2006 and 2007. This increase is applied after applicable surcharges. For 2008 and subsequent years, rates will be increased by 10%, 20% or 30%, or reduced by 7% or 12%, based on the cash balance of the Unemployment Trust Fund.

288.128, 288.310 & 288.330 - Alternative Financing - The Board of Unemployment Fund Financing is created. This board has the authority to issue, sell and deliver credit instruments or financial agreements, which shall mature no later than three years after issuance, not to exceed $450 million. The repayment of these credit instruments and financial agreements would take place in the form of an employer surcharge based upon each employer's proportionate share of the amount due.

288.380 & 288.395 - Fraud Provisions - Employers and employees found to have committed fraud in order to obtain or deny benefits will be subject to a monetary penalty. The penalties will be 25% of the amount fraudulently obtained or denied for first offenses and 100% of the amount fraudulently obtained or denied for repeat offenses. In addition, employers and employees perpetrating fraud shall be guilty of a class A misdemeanor for first offenses and a class D felony for repeat offenses.

288.501 - Advisory Council - The Missouri State Unemployment Council is created. This nine-member board is to annually report to the Governor and the General Assembly its recommendations on pertinent legislation, the status and projected maintenance requirements for solvency of unemployment insurance, and the adequacy of unemployment compensation. The council may, except if prohibited by a concurrent resolution of the General Assembly, commission an outside study of the solvency, adequacy, and staffing and operational efficiency of the Missouri unemployment system.