The countdown has begun.
For most 501(c)(3) organizations with 10 or more employees, November is the month to exercise their state unemployment tax exemption for an effective date of January 1, 2015.
What does that mean? Well, by federal law, 501(c)(3)s are allowed to opt-out of paying taxes into their state unemployment tax fund, and instead only reimburse the state if and when they have an actual unemployment claim, dollar-for-dollar.
It can be a savings opportunity for many nonprofits who have lower claims than what they pay in state unemployment taxes—which are often driven up by for-profits and other companies that go out of business, as well as state fund deficits and improper payments made in error.
The Unemployment Services Trust (UST) performed more than 200 free unemployment tax savings evaluations for nonprofits with 10 or more employees in 2013, finding a total of $3,532,485.26 potential unemployment tax savings if they were to exercise their exemption and join the UST program instead.
This year, UST is aiming to identify more than $7 million in unemployment tax savings for nonprofits through free savings evaluations. But time is running out. Most states have a December 1 opt-out deadline, so UST needs all savings evaluation forms submitted before November 15th at the latest in order to meet the state deadline.
You can view your state’s unemployment tax exemption deadline here: www.chooseust.org/state-unemployment-tax-opt-out-deadlines-for-nonprofits
Unfortunately, if a nonprofit misses the state deadline, they have to wait until the following year to exercise their exemption and join the Unemployment Services Trust. So if you or a nonprofit you know has not exercised their exemption, be sure to share the free savings evaluation before the November 15th deadline: www.chooseust.org/request-a-savings-quote