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Form Uc700 - Unemployment Insurance Tax Rate Calculation - Arizona Department Of Economic Security

October 2002

UC-700 (10-02)

UNEMPLOYMENT INSURANCE

TAX RATE CALCULATION

During the last quarter of each year, the Unemployment Insurance tax rates for the next calendar year are determined.

The calculation process begins in October, and Tax Rate Notices are mailed to each liable employer during the first week

of January of the new tax year.

In Arizona, unemployment tax rates are calculated according to a “reserve ratio” experience rating system that provides

individualized tax rates. Only new employers (other than successors) are automatically assigned a tax rate of 2.70% for a

minimum of two calendar years.

All other active liable employers receive a calculated tax rate based on their unique “experience” history:

•

the amount of taxes the employer has paid timely,

•

the amount of unemployment benefits paid to former employees and charged to the employer’s account,

•

the average size of the employer’s annual taxable payroll, and

•

the overall solvency of the Unemployment Insurance Trust Fund from which benefits are paid.

The solvency of the trust fund, and therefore the average employer tax rate depends on the total dollar amount of taxes

paid by employers offset by the total dollar amount of unemployment benefits paid to claimants.

The trust fund is used exclusively to pay Unemployment Insurance benefits to eligible unemployed claimants.

VOLUNTARY TAX PAYMENTS

Employers will receive their Tax Rate Notices in early January 2003. The notices detail the specific data used to calculate

individual employer rates for the new year.

After receiving the notice, employers can act to reduce their assigned unemployment tax rate by making a "Voluntary

Payment". The notice explains how much an employer can "voluntarily" pay to reduce that tax rate.

It is important to read the rate notice carefully and follow the instructions on the reverse side to determine whether or not

making a voluntary payment would be beneficial.

It may not always be advantageous to make an extra payment to obtain a lower rate if the amount of the required

voluntary payment would be more than the savings derived by paying at the lower rate.

A voluntary payment submitted to reduce your tax rate is not in lieu of any taxes due.

More information on voluntary payments is available on the Employment Security Administration UI Tax website at:

If you need help in evaluating whether a voluntary payment could save you money, please call the Experience Rating Unit

at (602) 248-9101 EXT 5501.

A VOLUNTARY PAYMENT MUST BE POSTMARKED NO LATER THAN JANUARY 31ST OF THE TAX YEAR FOR

WHICH THE NOTICE IS ISSUED.

Form Uc700 - Unemployment Insurance Tax Rate Calculation - Arizona Department Of Economic Security