New York State Department of Labor's 2024 Interest Assessment Surcharge (IAS)

Employers across New York have started to receive notices from the New York State Department of Labor Unemployment Insurance Division regarding their 2024 Interest Assessment Surcharge (IAS).

Background

In early 2020, New York’s unemployment trust fund balance stood at nearly $2.7 billion. When the pandemic hit, the state responded to an unprecedented number of unemployment insurance claims, quickly turning the balance into a multi-billion dollar deficit owed to the federal government. The federal loan process requires the State of New York to pay accrued interest to the federal government by September 30th of each year, beginning in 2022.

The Interest Assessment Surcharge (IAS), enacted by the New York State legislature, assesses a temporary charge to businesses to ensure the state has sufficient funds to pay the interest owed.

What Does This Mean for Employers?

The IAS for businesses is calculated using the wages subject to contributions for the current payroll year (a four-quarter period ending with the third quarter of the most recent calendar year) and multiplying those wages by the current IAS rate. The 2024 rate is 0.12%, a reduction from the 2023 rate of 0.18%. The IAS rate will vary from year to year depending on the outstanding loan balance, wages subject to contributions, and the federally prescribed interest rate.

There are penalties for late payment, including interest assessed on contributions and re-employment service fund amounts at the rate of 12% per year from the due date to the date paid. Employers who pay late will not receive a credit to their account for future rating purposes if the payment is more than 60 days late. It may also impact the credit on the IRS form 940.

The Employer Accounts Adjustment Section of the Unemployment Division has a dedicated phone number (1-888-899-8810) for employers with specific questions regarding these notices.

What Can Employers Do About the IAS?

While there is very little employers can do regarding this particular assessment, broadly speaking, unemployment is a manageable business expense, and there are steps employers should be taking to keep costs down, including:

• Submit your quarterly payments on time (late charges apply!).
• Review notices of benefit entitlement or payment.
• Consider shared work or reduction in hours as alternatives to layoffs.
• Contest charges if you think employees should be ineligible to collect (thorough documentation will be critical to protesting charges successfully).
• Report fraudulent charges.
• Have an outsourcing program.

If you have questions about how your rate is determined, protesting specific claims, or want to learn more about the unemployment insurance system in New York, please contact us!

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