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Minnesota Legislature

Office of the Revisor of Statutes

Chapter 268

Section 268.051

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268.051 EMPLOYERS TAXES.
    Subdivision 1. Payments. (a) Unemployment insurance taxes and any additional
assessments, fees, or surcharges shall accrue and become payable by each employer for each
calendar year on the taxable wages that the employer paid to employees in covered employment,
except for:
(1) nonprofit organizations that elect to make reimbursements as provided in section
268.053; and
(2) the state of Minnesota and political subdivisions that make reimbursements, unless they
elect to pay taxes as provided in section 268.052.
Except as allowed under section 268.0511, each employer shall pay taxes quarterly, at the
employer's assigned tax rate under subdivision 6, on the taxable wages paid to each employee.
The commissioner shall compute the tax due from the wage detail report required under section
268.044 and notify the employer of the tax due. The taxes and any additional assessments, fees, or
surcharges shall be paid to the trust fund and must be received by the department on or before the
last day of the month following the end of the calendar quarter.
(b) The tax amount computed, if not a whole dollar, shall be rounded down to the next
lower whole dollar.
(c) If for any reason the wages on the wage detail report under section 268.044 are adjusted
for any quarter, the commissioner shall recompute the taxes due for that quarter and assess the
employer for any amount due or credit the employer as appropriate.
    Subd. 1a. Payments by electronic payment required. (a) Every employer that reports 500 or
more employees in any calendar quarter on the wage detail report required under section 268.044
shall make any payments due under this chapter and section 116L.20 by electronic payment.
(b) All third-party processors, paying quarterly taxes on behalf of a client company, shall
make any payments due under this chapter and section 116L.20 by electronic payment.
(c) Regardless of paragraph (a) or (b), the commissioner shall have discretion to accept
payment by other means.
    Subd. 2. Computation of tax rates; additional assessments. (a) For each calendar year
the commissioner shall compute the tax rate of each taxpaying employer that qualifies for an
experience rating by adding the base tax rate to the employer's experience rating.
(b) The base tax rate for the calendar year and any additional assessments under this
subdivision shall be determined based upon the amount in the trust fund on March 31 of the prior
year as a percentage of total wages paid in covered employment. The base tax rate shall be:
(1) one-tenth of one percent if the trust fund is equal to or more than 0.75 percent;
(2) two-tenths of one percent if the trust fund is less than 0.75 percent but equal to or more
than 0.65 percent;
(3) three-tenths of one percent if the trust fund is less than 0.65 percent but equal to or
more than 0.55 percent; or
(4) four-tenths of one percent if the trust fund is less than 0.55 percent.
(c) There shall be a "falling trust fund adjustment" to the base tax rate for the calendar year if
the amount in the trust fund on March 31 of the prior year is less than 0.75 percent of total wages
paid in covered employment and:
(1) the amount in the trust fund on March 31 of the prior year is ten percent or more below
the amount in the trust fund on March 31 of the year prior to that; or
(2) the amount in the trust fund on March 31 of the prior year is greater than the amount in
the trust fund on June 30 of that same year.
If a "falling trust fund adjustment" is applicable, then the base tax rate shall be 0.1 percent greater
than otherwise provided for under paragraph (b).
(d) In addition to the base tax rate under paragraph (b), there shall be an additional
assessment for the calendar year on all quarterly unemployment taxes due from every taxpaying
employer if the amount in the trust fund on March 31 of the prior year is less than .55 percent of
total wages paid in covered employment. The assessment shall be as follows:
(1) a five percent assessment if the trust fund is less than 0.55 percent but equal to or more
than 0.45 percent;
(2) a ten percent assessment if the trust fund is less than 0.45 percent but equal to or more
than 0.35 percent; or
(3) a 14 percent assessment if the trust fund is less than 0.35 percent.
(e) For the purposes of this subdivision, the trust fund shall not include any money borrowed
from the federal unemployment trust fund pursuant to section 268.194, subdivision 6.
(f) For the purposes of this subdivision, total wages paid in covered employment shall be
those wages paid to all employees in covered employment during the calendar year prior to the
March 31 date used in paragraph (b).
(g) The commissioner may compute any assessment under this subdivision, and any
assessment under subdivision 8, as a percentage of the employer's experience rating and the base
tax rate, rounded to the nearest hundredth of a percent.
On tax rate notices sent under subdivision 6, any assessments under this subdivision may be
combined with any special assessments for interest on federal loans provided for in subdivision 8
into a single combined assessment.
    Subd. 3. Computation of a taxpaying employer's experience rating. (a) On or before each
December 15, the commissioner shall compute an experience rating for each taxpaying employer
who has been subject to paying unemployment taxes for the 12 calendar months ending on the
prior June 30. The experience rating computed shall be applicable for the following calendar year.
The experience rating shall be the ratio obtained by dividing 125 percent of the total
unemployment benefits required under section 268.047 to be used in computing the employer's
tax rate during the 48 calendar months ending on the prior June 30, by the employer's total taxable
payroll for that same period.
(b) The experience rating shall be computed to the nearest one-hundredth of a percent, to a
maximum of 8.90 percent.
    Subd. 4. Experience rating history transfer. (a) When:
(1) a taxpaying employer acquires all of the organization, trade or business, or workforce
of another taxpaying employer; and
(2) there is 25 percent or more common ownership or there is substantially common
management or control between the predecessor and successor, the experience rating history of the
predecessor employer shall be transferred as of the date of acquisition to the successor employer.
(b) When:
(1) a taxpaying employer acquires a portion, but less than all, of the organization, trade or
business, or workforce of another taxpaying employer; and
(2) there is 25 percent or more common ownership or there is substantially common
management or control between the predecessor and successor, the successor employer shall
acquire, as of the date of acquisition, the experience rating history attributable to the portion it
acquired, and the predecessor employer shall retain the experience rating history attributable to
the portion that it has retained. If the commissioner determines that sufficient information is
not available to substantiate that a distinct severable portion was acquired and to assign the
appropriate distinct severable portion of the experience rating history, the commissioner shall
assign the successor employer that percentage of the predecessor employer's experience rating
history equal to that percentage of the employment positions it has obtained, and the predecessor
employer shall retain that percentage of the experience rating history equal to the percentage
of the employment positions it has retained.
(c) The term "common ownership" for purposes of this subdivision includes ownership by
a spouse, parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece, nephew, or
first cousin, by birth or by marriage.
(d) Each successor employer that is subject to paragraph (a) or (b) must notify the
commissioner of the acquisition by electronic transmission, in a format prescribed by the
commissioner, within 30 calendar days of the date of acquisition. Any successor employer that
fails to notify the commissioner is subject to the penalties under section 268.184, subdivision 1a,
if the successor's experience rating was lower than the predecessor's experience rating at the time
of the acquisition. Penalties shall be credited to the administration account to be used to ensure
integrity in the unemployment insurance program.
(e) If the successor employer under paragraphs (a) and (b) had an experience rating at the
time of the acquisition, the transferred experience rating history of the predecessor shall be
combined with the successor's experience rating history, as of the date of acquisition, for purposes
of recomputing a tax rate.
(f) If there has been a transfer of an experience rating history 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.
(g) The commissioner, upon notification of an employer, or upon the commissioner's own
motion if the employer fails to provide the required notification, shall determine if an employer is
a successor within the meaning of this subdivision. The commissioner shall, after determining the
issue of succession or nonsuccession, recompute the tax rate under subdivision 6 of all employers
affected. The commissioner shall send the recomputed tax rate to all affected employers by
mail or electronic transmission. Any affected employer may protest the recomputed tax rate in
accordance with the procedures in subdivision 6, paragraph (c).
(h) The "experience rating history" for purposes of this subdivision and subdivision 4a means
those factors set out in subdivision 3, paragraph (b), that make up an experience rating.
For purposes of this chapter, an "acquisition" means anything that results in the obtaining
by the successor employer, in any way or manner, of the organization, trade or business, or
workforce of the predecessor employer.
A "distinct severable portion" in paragraph (b) means a location or unit separately identifiable
within the employer's wage detail report under section 268.044.
(i) Regardless of the ownership, management, or control requirements of paragraph (a), if
there is an acquisition or merger of a publicly held corporation by or with another publicly held
corporation the experience rating histories of the corporations shall be combined as of the date of
acquisition or merger for the purpose of recomputing a tax rate.
    Subd. 4a. Actions that avoid taxes. (a) If the commissioner determines that any action was
done, in whole or in part, to avoid:
(1) an experience rating history;
(2) the transfer of an experience rating history; or
(3) the assignment of a tax rate for new employers under subdivision 5, paragraph (a) or
(b), the commissioner, to insure that the trust fund receives all the taxes that would have been
received had the action not occurred, may, effective the date of the action, transfer all or part of
an experience rating history and recompute the tax rate or assign the appropriate new employer
tax rate.
(b) This subdivision shall apply to any action between persons regardless of whether there
is any commonality of ownership, management, or control between the persons. The authority
granted to the commissioner under this subdivision is in addition to any other authority granted
to the commissioner.
    Subd. 5. Tax rate for new employers. (a) Each new taxpaying employer that does not
qualify for an experience rating under subdivision 3, except new employers in a high experience
rating industry, shall be assigned, for a calendar year, a tax rate the higher of (1) one percent, or
(2) the tax rate computed, to the nearest one-hundredth of a percent, by dividing the total amount
of unemployment benefits paid all applicants during the 48 calendar months ending on June 30 of
the prior calendar year by the total taxable wages of all taxpaying employers during the same
period, plus the applicable base tax rate and any additional assessments under subdivision 2,
paragraph (d).
(b) Each new taxpaying employer in a high experience rating industry that does not qualify
for an experience rating under subdivision 3, shall be assigned, for a calendar year, a tax rate of
8.00 percent, plus the applicable base tax rate and any additional assessments under subdivision 2,
paragraph (d).
An employer is considered to be in a high experience rating industry if:
(1) the employer is engaged in residential, commercial, or industrial construction, including
general contractors;
(2) the employer is engaged in sand, gravel, or limestone mining;
(3) the employer is engaged in the manufacturing of concrete, concrete products, or asphalt;
or
(4) the employer is engaged in road building, repair, or resurfacing, including bridge and
tunnels and residential and commercial driveways and parking lots.
(c) The commissioner shall send to the new employer, by mail or electronic transmission,
notice of the tax rate assigned. An employer may protest the assignment of a tax rate in accordance
with the procedures in subdivision 6, paragraph (c).
    Subd. 6. Notice of tax rate. (a) On or before each December 15, the commissioner shall
notify each employer by mail or electronic transmission of the employer's tax rate, along with
any additional assessments, fees, or surcharges, for the following calendar year. The notice shall
contain the base tax rate and the factors used in determining the employer's experience rating.
Unless a protest of the tax rate is made, the computed tax rate shall be final, except for fraud or
recomputation required under subdivision 4 or 4a, and shall be the rate at which taxes shall be
paid. A recomputed tax rate under subdivision 4 or 4a shall be the rate applicable for the quarter
that includes the date of acquisition and any quarter thereafter during the calendar year in which
the acquisition occurred. 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, 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 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 error in computation or assignment of the tax rate. 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 taxpaying employer who has been assigned a tax rate
based upon an experience rating, and has no amounts past due under this chapter, may, upon the
voluntary payment of an amount equivalent to any portion or all of the unemployment benefits
used in computing the experience rating plus a surcharge of 25 percent, obtain a cancellation of
unemployment benefits used equal to the payment made, less the surcharge. Upon the payment,
the commissioner shall compute a new experience rating for the employer, and compute a new
tax rate.
(b) Voluntary payments may be made only by electronic payment and must be received within
120 calendar days from the beginning of the calendar year for which the tax rate is effective.
    Subd. 8. Special assessment for interest on federal loan. (a) If on October 31 of any
year, the commissioner, in consultation with the commissioner of finance, determines that an
interest payment will be due during the following calendar year on any loan from the federal
unemployment trust fund under section 268.194, subdivision 6, a special assessment on taxpaying
employers will be in effect for the following calendar year. The legislature authorizes the
commissioner, in consultation with the commissioner of finance, to determine the appropriate
level of the assessment, from two percent to eight percent of the quarterly unemployment taxes
due, that will be necessary to pay the interest due on the loan.
(b) The special assessment shall be placed into a special account from which the
commissioner shall pay any interest that has accrued on any loan from the federal unemployment
trust fund provided for under section 268.194, subdivision 6. If, at the end of each calendar
quarter, the commissioner, in consultation with the commissioner of finance, determines that the
balance in this special account, including interest earned on the special account, is more than is
necessary to pay the interest which has accrued on any loan as of that date, or will accrue over the
following calendar quarter, the commissioner shall immediately pay to the trust fund the amount
in excess of that necessary to pay the interest on any loan.
    Subd. 9. Assessments, fees, and surcharges; treatment. Any assessment, fee, or surcharge
imposed under the Minnesota Unemployment Insurance Law shall be treated the same as, and
considered as, a tax. Any assessment, fee, or surcharge shall be subject to the same collection
procedures that apply to past due taxes.
History: 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; 1999 c 107 s
23-28,66; 2000 c 343 s 4; 2001 c 175 s 12-15; 2002 c 380 art 1 s 1; 1Sp2003 c 3 art 1 s 1-6; art
2 s 20; 2004 c 183 s 24-30; 2005 c 112 art 1 s 6-9; art 2 s 11