Alabama Employers to Receive Tax Assessments to Pay for Interest Incurred on Money Borrowed from the US Treasury to pay Unemployment Benefits
August 3, 2011
Due to high levels of unemployment over the last several years, the State of Alabama has borrowed money for the Unemployment Compensation Trust Fund in order to pay unemployment compensation benefits. From 2007 through 2010, more was paid in unemployment benefits than was collected in unemployment taxes. As a result, the Unemployment Compensation Trust Fund was depleted. The money to pay benefits in excess of collections was borrowed from the US Treasury.
According to Section 25-4-55 of the Code of Alabama, the interest expense must be assessed to employers. Therefore, each employer will be assessed 0.07% (7 hundredths of 1%) of their taxable wages for the calendar year ended December 31, 2010.
Notices from the Alabama Department of Industrial Relations went out August 10, 2011. Taxpayers will have until 9/9/2011 to pay the assessment. Electronic payment is preferred, but not required.
Circular 230 Notice: If this communication contains tax advice, this advice was not intended to be used, and cannot be relied upon by anyone, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.