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Minnesota Legislature

Office of the Revisor of Statutes

Chapter 268

Section 268.051

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Recent History

268.051 EMPLOYERS TAXES.
    Subdivision 1. Payments. (a) Unemployment insurance taxes and any additional
assessments, fees, or surcharges 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.
    Each employer must 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 special assessments, fees, or surcharges must 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, is 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 50 or
more employees in any calendar quarter on the wage detail report required under section 268.044
must make any payments due under this chapter and section 116L.20 by electronic payment.
    (b) All third-party processors, paying on behalf of a client company, must make any
payments due under this chapter and section 116L.20 by electronic payment.
    (c) Regardless of paragraph (a) or (b), the commissioner has the 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 along with
assigning any appropriate additional assessment under paragraph (d).
    (b) The base tax rate for the calendar year and any additional assessments under this
subdivision are 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 is:
    (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 is 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 before 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 is one-tenth of one percent
greater than otherwise provided for under paragraph (b).
    (d) In addition to the base tax rate, there is an additional assessment for the calendar year
on the 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 0.55 percent of total wages paid in covered
employment. The assessment is 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 does not include any money borrowed
from the federal unemployment trust fund provided for in section 268.194, subdivision 6.
    (f) For the purposes of this subdivision, total wages paid in covered employment are those
wages paid to all employees in covered employment during the calendar year before the March 31
date used in paragraph (b).
    (g) The base tax rate and any additional assessments are assessed on all taxpaying employers
to cover a portion of the costs to the trust fund for unemployment benefits paid that do not affect
any single employer's future experience rating because:
    (1) the employer's experience rating is limited by the maximum under subdivision 3,
paragraph (b);
    (2) the employer has ceased doing business; or
    (3) the unemployment benefits paid have been determined not to be used in computing the
employer's experience rating under section 268.047, subdivision 2 or 3.
    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 required to file wage detail reports for the 12 calendar months ending on the prior
June 30. The experience rating computed is applicable for the following calendar year.
    The experience rating is 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 is computed to the nearest one-hundredth of a percent, to a
maximum of 8.90 percent.
    (c) The use of 125 percent of unemployment benefits paid under paragraph (a), rather than
100 percent of the amount of unemployment benefits paid, is done in order for the trust fund to
recover from all taxpaying employers a portion of the costs of unemployment benefits paid
that do not affect any individual employer's future experience rating because of the reasons set
out in subdivision 2, paragraph (g).
    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 is transferred 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 acquires,
as of the date of acquisition, the experience rating history attributable to the portion it acquired,
and the predecessor employer retains 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 retains 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. Payments made toward the penalties are 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 is combined
with the successor's experience rating history 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 is not 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 appeal 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
the amount of unemployment benefits paid and the taxable wages that are being used and would
be used in computing the current and any future 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 are 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 applies 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, must 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, must 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 appeal 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
must contain the base tax rate and the factors used in determining the employer's experience
rating. Unless an appeal of the tax rate is made, the computed tax rate is final, except for fraud
or recomputation required under subdivision 4 or 4a, and is the rate at which taxes must be
paid. A recomputed tax rate under subdivision 4 or 4a is 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 is not subject to collateral attack by way of claim for a credit
adjustment or refund, or otherwise.
    (b) If the legislature, after 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 must be computed and sent to the
employer.
    (c) A review of an employer's tax rate may be obtained by the employer filing an appeal
within 20 calendar days from the date the tax rate notice was sent to the employer. Proceedings on
the appeal are 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 employer's tax rate.
    Subd. 7. Tax rate buydown. (a) Any taxpaying employer that has been assigned a tax
rate based upon an experience rating, and has no amounts past due under this chapter, may,
upon the 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) Payments for a tax rate buydown 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 total quarterly unemployment
taxes due based upon determined rates and assigned assessments under subdivision 2, that will be
necessary to pay the interest due on the loan.
    (b) The special assessment must 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 that 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 is treated the same as,
and considered as, a tax. Any assessment, fee, or surcharge is 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; 2007 c 128 art
1 s 6-8; art 2 s 2; art 3 s 6-10; art 6 s 24,25