SOLVENCY TAX SURCHARGE

In accordance with the Colorado Employment Security Act (CESA) 8-76-102 (5)(a), a solvency tax surcharge (STS) was assigned to all ratable employer accounts beginning in calendar year 2004. Ratable employers contribute taxes according to an established rate rather than reimburse the Unemployment Insurance (UI) Program dollar for dollar based upon the benefits charged against the account. Most employer accounts are ratable.

The purpose of the STS is to maintain a sufficient monetary level in the UI Trust Fund, which ensures the UI Program’s ability to pay UI benefits as established in CESA. A short-term increase in the tax rate due to the addition of the STS will result in an actual decrease in employers’ base tax rates as the balance of the UI Trust Fund increases.

Form UITR-7, Notice of Employer’s Tax Rate, mailed to employers in November 2007, provides the combined tax rate for calendar year 2008. The yearly STS increment is included in the combined tax rate for calendar year 2008 for ratable employer accounts.

Because of an increase in the monetary level of the UI Trust Fund, the 2008 base rate decreased from the previous calendar year. For calendar year 2008 the base tax rate is moving one rate schedule to the left. According to CESA 8-76-103 (3)(b)(II)(B), this tax-rate schedule (“450 Million Plus”) has the lowest base rates.

The following Web pages provide additional information about the STS:

• Solvency Tax Surcharge and Its Impact on Tax Rates for Calendar Year 2008, published on 11/05/2007
• Questions and Answers Regarding the Solvency Tax Surcharge, updated on 11/05/2007
• Unemployment Insurance Tax Protest Information
• Notice of Solvency Tax Surcharge for Calendar Year 2004, mailed in December 2004

If you have any questions or comments regarding STS, Contact Us.

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