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Minnesota Legislature

Office of the Revisor of Statutes

Chapter 268

Section 268.051

Recent History

268.051 Employers taxes.

Subdivision 1. Payments. (a) Taxes shall accrue and become payable by each employer for each calendar year that the employer paid wages to employees in covered employment, except for:

(1) nonprofit corporations as provided in section 268.053; and

(2) the state of Minnesota and political subdivisions as provided in section 268.052.

Each employer shall pay taxes quarterly, at the employer's assigned tax rate, on the taxable wages paid to each employee. The taxes shall be paid to the fund on or before the last day of the month following the end of the calendar quarter.

(b) The tax may be paid in an amount to the nearest whole dollar.

(c) When the tax for any calendar quarter is less than $1, the tax shall be disregarded.

Subd. 1a. Tax reports. (a) Every employer, except those making payments in lieu of taxes, shall submit a tax report on a form, or in a manner, prescribed by the commissioner on or before the last day of the month following the end of the calendar quarter, unless the employer meets the requirements for submitting tax reports annually under section 268.0511. An employer that fails to submit a tax report when due, or submits an incorrect tax report, shall be subject to section 268.057, subdivision 1.

(b) Each tax report shall include the total wages paid and the taxable wages paid that quarter, the amount of tax due, and any other information required by the commissioner.

(c) A tax report must be submitted for each calendar quarter even though no wages were paid or no tax is due.

Subd. 2. Computation of tax rates. (a) For each calendar year the commissioner shall compute the tax rate of each employer that qualifies for an experience rating by adding the minimum tax rate to the employer's experience rating.

(b) The minimum tax rate shall be six-tenths of one percent if the amount in the fund is less than $200,000,000 on June 30 of the prior calendar year; or five-tenths of one percent if the fund is more than $200,000,000 but less than $225,000,000; or four-tenths of one percent if the fund is more than $225,000,000 but less than $250,000,000; or three-tenths of one percent if the fund is more than $250,000,000 but less than $275,000,000; or two-tenths of one percent if the fund is $275,000,000 but less than $300,000,000; or one-tenth of one percent if the fund is $300,000,000 or more.

(c) For the purposes of this subdivision the fund shall not include any money advanced from the federal unemployment trust fund.

Subd. 3. Computation of an employer's experience rating. (a) For each calendar year, the commissioner shall compute an experience rating for an employer who has been subject to this chapter for at least the 12 calendar months prior to July 1 of the prior calendar year. The experience rating shall be the ratio obtained by dividing 1-1/4 times the total benefits charged to the employer's account during the period the employer has been subject to this chapter but not less than the 12 or more than the 60 calendar months ending on June 30 of the prior calendar year by the employer's total taxable payroll for the same period.

(b) For purposes of paragraph (a), only that taxable payroll upon which taxes have been paid on or before September 30 of the prior calendar year may be used in computing an employer's experience rating.

(c) The experience rating shall be computed to the nearest one-tenth of a percent, to a maximum of 8.9 percent.

Subd. 4. Experience rating record transfer. (a) When an employer acquires the organization, trade or business or substantially all the assets of another employer, and there is 25 percent or more common ownership, directly or indirectly, between the predecessor and successor, the experience rating record of the predecessor employer shall be transferred as of the date of acquisition to the successor employer for the purpose of computing a tax rate.

(b) When an employer acquires a distinct severable portion of the organization, trade, business, or assets that is less than substantially all of the employing enterprises of another employer, and there is 25 percent or more common ownership, directly or indirectly, between the predecessor and successor, the successor employer shall acquire the experience rating record attributable to the portion it acquired, and the predecessor employer shall retain the experience rating record attributable to the portion that it has retained, if (1) the successor makes a written request to apply for the transfer of the experience rating record attributable to the severable portion acquired from the predecessor within 180 calendar days from the date of acquisition, and (2) files an application within the time and in the manner prescribed by the commissioner that furnishes sufficient information to substantiate the severable portion and to assign the appropriate total and taxable wages and benefit charges to the successor for experience rating purposes.

(c) The term "common ownership" for purposes of this subdivision includes ownership by a spouse, parent, child, brother, sister, aunt, uncle, or first cousin, by birth or by marriage.

(d) If the successor employer under paragraphs (a) and (b) had an experience rating record at the time of the acquisition, the transferred record of the predecessor shall be combined with the successor's record for purposes of computing a tax rate.

(e) If there has been a transfer of an experience rating record under paragraph (a) or (b), employment with a predecessor employer shall not be considered to have been terminated if similar employment is offered by the successor employer and accepted by the employee.

(f) The commissioner, upon the commissioner's own motion or upon application of an employer shall determine if an employer is a successor within the meaning of this subdivision and shall send the determination to the employer by mail or electronic transmission. The determination shall be final unless an appeal is filed by the employer within 30 calendar days after the sending of the determination. Proceedings on the appeal shall be conducted in accordance with section 268.105.

(g) The commissioner may, as the result of any determination or decision regarding succession or nonsuccession, recompute the tax rate of all employers affected by the determination or decision for any year, including the year of the acquisition and subsequent years, that is affected by the transfer or nontransfer of part or all of the experience rating record. This paragraph does not apply to rates that have become final before the filing of a written request to apply for the transfer of a severable portion of the experience rating record under paragraph (b).

(h) The experience rating record for purposes of this subdivision shall consist of those factors which make up an experience rating, without the 12-month minimum required under subdivision 3.

(i) If the commissioner finds that a transaction was done, in whole or in part, to avoid an experience rating record or the transfer of an experience rating record, the commissioner may transfer the experience rating record to an employer notwithstanding the requirements of paragraph (a).

Subd. 5. Tax rate for new employers. (a) Each employer that does not qualify for an experience rating, except employers in the construction industry, shall be assigned a tax rate the higher of (1) one percent, or (2) the state's average cost rate; to a maximum of 5-4/10 percent. For purposes of this paragraph, the state's average cost rate shall be computed annually and shall be derived by dividing the total amount of benefits paid during the 60 consecutive calendar months prior to July 1 of each year by the total taxable wages of all taxpaying employers during the same period. This rate shall be applicable for the calendar year following the computation date.

(b) Each employer in the construction industry that does not qualify for an experience rating shall be assigned a tax rate, the higher of (1) one percent, or (2) the state's average cost rate for construction employers to a maximum of 8.9 percent, plus the applicable minimum tax rate. For purposes of this paragraph, the state's average cost rate shall be computed annually and shall be derived by dividing the total amount of benefits paid to claimants of construction industry employers during the 60 consecutive calendar months prior to July 1 of each year by the total taxable wages of construction industry employers during the same period. This rate shall be applicable for the calendar year following the computation date.

An employer is considered in the construction industry if the employer is within division C of the Standard Industrial Classification Manual issued by the United States Office of Management and Budget, except as excluded by rules adopted by the commissioner.

Subd. 6. Notice of tax rate. (a) The commissioner shall notify each employer by mail or electronic transmission of the employer's tax rate as determined for any calendar year. The notice shall contain the tax rate and the factors used in determining the employer's experience rating. Unless a protest of the rate is made, the assigned rate shall be final except for fraud and shall be the rate at which taxes shall be paid. The tax rate shall not be subject to collateral attack by way of claim for a credit adjustment or refund, or otherwise.

(b) If the legislature, subsequent to the sending of the tax rate, changes any of the factors used to determine the rate, the earlier notice shall be void. A new tax rate based on the new factors shall be computed and sent to the employer.

(c) A review of an employer's tax rate may be obtained by the employer filing, in a manner prescribed by the commissioner, a protest within 30 calendar days from the date the tax rate notice was sent to the employer. Upon receipt of the protest, the commissioner shall review the tax rate to determine whether or not there has been any clerical error or error in computation. The commissioner shall either affirm or make a redetermination of the rate and a notice of the affirmation or redetermination shall be sent to the employer by mail or electronic transmission. The affirmation or redetermination shall be final unless the employer files an appeal within 30 calendar days after the date the affirmation or redetermination was sent. Proceedings on the appeal shall be conducted in accordance with section 268.105.

(d) The commissioner may at any time upon the commissioner's own motion correct any error in the computation or the assignment of an employer's tax rate.

Subd. 7. Tax rate buydown. (a) Any employer who has been assigned a tax rate based upon an experience rating may, upon the voluntary payment of an amount equivalent to any portion or all of the benefits charged to the employer's account, plus a surcharge of 25 percent, obtain a cancellation of benefits charged to the account equal to the payment made, less the surcharge. Upon the payment, the commissioner shall compute a new experience rating for the employer, and determine a new tax rate.

(b) Voluntary payments may be made only during the 30 calendar day period immediately following the date of sending of the notice of tax rate. This period may be extended, upon a showing of good cause, but in no event shall a voluntary payment be allowed after 120 calendar days from the beginning of the calendar year for which the tax rate is effective.

(c) Voluntary payments made within the time required will not be refunded unless a request is made in writing within 30 calendar days after sending of the notice of the new tax rate.

Subd. 8. Solvency assessment. (a) If the fund balance is less than $150,000,000 on June 30 of any year, a solvency assessment on taxpaying employers will be in effect for the following calendar year. The employer shall pay quarterly a solvency assessment of ten percent of the taxes due.

(b) The solvency assessment shall be placed into a special account from which the commissioner shall pay any interest accruing on any advance from the federal unemployment trust fund provided for under section 268.194, subdivision 6. If the commissioner determines that the balance in this special account is more than is necessary to pay the interest on any advance, the commissioner shall pay to the fund the amount in excess of that necessary to pay interest on any advance.

HIST: Ex1936 c 2 s 4; 1937 c 306 s 2; 1939 c 443 s 3; 1941 c 554 s 3; 1943 c 650 s 2; 1945 c 376 s 3; 1947 c 32 s 1-8; 1947 c 432 s 3-5,11; 1947 c 600 s 7; 1949 c 526 s 1; 1949 c 605 s 3-6,17,18; 1951 c 442 s 2; 1953 c 97 s 5,6,8; 1953 c 288 s 1; 1955 c 380 s 2-4,6; 1957 c 25 s 1; 1957 c 873 s 2; 1959 c 702 s 2-4; 1965 c 45 s 40; 1965 c 741 s 6-11; 1967 c 573 s 3; 1967 c 617 s 1; 1967 c 856 s 1; 1969 c 3 s 1; 1969 c 567 s 3; 1969 c 854 s 6; 1971 c 860 s 1; 1971 c 942 s 3-6; 1973 c 254 s 3; 1973 c 599 s 2-4; 1975 c 336 s 6-10; 1977 c 4 s 4,5; 1977 c 297 s 6-11; 1977 c 430 s 25 subd 1; 1977 c 455 s 82; 1978 c 674 s 60; 1979 c 181 s 4-8; 1980 c 508 s 2-7; 1Sp1982 c 1 s 5-12; 1983 c 216 art 1 s 87; 1983 c 247 s 112; 1983 c 372 s 9-15; 1985 c 248 s 70; 1Sp1985 c 14 art 9 s 75; 1986 c 444; 1986 c 451 s 1; 1987 c 242 s 1; 1987 c 362 s 9-12; 1987 c 385 s 10-18; 1989 c 65 s 3-5; 1989 c 209 art 2 s 1; 1992 c 484 s 4-7; 1994 c 483 s 1; 1994 c 488 s 8; 1995 c 54 s 3-7; 1996 c 417 s 5-7,31; 1997 c 66 s 11-15,17,18,20,21,79; 1998 c 265 s 13