State UI Tax Surcharge question

Nobody with any insight on this?

the items

Surcharge rate.

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surcharge

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problem?

My wife's Colorado business is Rate Code 4 which is Unrated Standard, which is usually the rate for a new business. Her business just got its first employees last year. Her UITR-7 shows a total combined Rate of 3.12%. That rate is made up of Item 7 (Base Rate = 1.7%) + Item 9 (Tax Surcharge = 0.22%) + Item 10 (Solvency Tax Surcharge = 1.8%) - Item 11 (Solvency Tax Surcharge Adjustment = 0.6%).

Quickbooks PRO 2006 Payroll has created 2 Colorado Unemployment Payroll tax Items: CO - Unemployment Company = 2.9% = Item 7 + Item 10 - Item 11 CO - Tax Surcharge = 0.22% = Item 9 The total of the 2 agrees with the specified Item 12 (Total Combined Rate = 3.12%)

QuickBooks set the value for the Company Rate to 2.9% which is normal for a company without experience. By going into Lists/PayRoll Items it can be edited on a quarterly basis, if the company rate, as set by the the UITR-7, is not the default for new payrolls. HTH

Hi Ken,

Thanks. I can edit the tax rate but that's not where the difference lies... The difference lies in the surcharge, which I can ONLY change to either 0 or .22%. My surcharge however, is .82%. I have no way to edit that and am looking for a workaround.

-Greg

if

difference

change to

way to edit

I am just a retired engineer, not an accountant, but based on what I have heard at a Colorado Workshop, I would have expected any new employer to be subject to the same CO Unemployment Rate structure that my wife's business is subject to. As I listed in my post, she has 2 surchage items listed on her UITR-7. Item 9 is the Tax Surchrge and is a positive 0.22% Item 11 is the Solvency Tax Surcharge Adjustment which is listed as 0.60% but since it is subtracted from the other elements of her rate to calculate the Total Combined Rate, it is effectively a negative number.

Just curious, is your Total Combined Rate not 3.12%.

Assuming QuickBooks payroll has created the same 2 items for you, I don't know where the issue is. Although the Items have different Type and Tax Tracking entries in Quickbooks, they both apply to the first $10,000 each emploee is payed, and the Payee and Account Number are the same. For my wife's businees, they are both under the "Payroll Liabilities" Liability Account and the "Payroll Expense" Expense Account. It's the combined number that is used by the the CO Dept of Labor Site to calculate your payment due, which is made payable to the Colorado State Treasurer. As long as the Total Combined Rates match, everything should be in balance.

Am I missing something?

No, my combined total is 2.52. 1.7% base rate and .82% surcharge.

Not that I know of, the only problem I have is that Quickbooks only allows me to enter 2 values for the surcharge, and neither of those is what I need. So, I wonder if the workaround that I described above is valid.

-Greg

on

is

surcharge.

We may be looking at different notices from the State of Colorado. I just looked at my wife's notices.

Her UITL-3 "NOTICE OF EMPLOYER LIABILITY AND UNEMPLOYMENT INSURANCE ACCOUNT NUMBER" was issued in September of 2004 when she hired her 1st employee. It showed a "YEAR BASE RATE" of

0.017(1.7%) , a "TOTAL SURCHARGE(S)" OF 0.0082(0.82%) , and a "COMBINED RATE" OF 0.0252(2.52%) just like you are reporting.

Her UITR-7 "NOTICE OF EMPLOYER'S TAX RATE" for the 2006 Tax Year shows the "Tax Surcharge" of 0.0022(0.22%), "Total Combined Rate" of 0.0312(3.12%) and the other Items that make up the rate. The 2006 UITR-7s were supposed have been mailed about

12/1/2005 but my wife did not receive her original one. We had to get a duplicate from the State (303)318-9100 or (800)480-8299. You might want to verify that you have the current UITR-7 for your business.

FYI: The 2006 and 2005 (which was also 3.12% for her business) rate increases were not supposed to be applicable only to her specific business, but instead were supposed to be related to the economic slowdown the State experienced which depleted the reserves in the Unemployment Insurance Fund.

Here's what I do. I change the surcharge to zero. Then I disable the Surtax payroll item. Then I set up the payroll item, SUTA, for the total rate including all components.

It works just fine.

I do use another software product to calculate the "over 10,000." It's a product my partner and I created in DOS a very long time ago and successfully sold to lots of other accountants who wanted to produce scannable computerized reports when these forms had to be done by hand. It gives me confidence in the reporting (on line) of the UITR 1 and 1a. It is a long-time record of employee earnings by client, by quarter and it double checks the FUTA as well. It just gives me that safety net that I don't totally trust QB for. It certainly isn't necessary. You can always do Excel work to make sure things are working correctly until you have that confidence level if you are concerned.