$2M in Unemployment Benefits go to Inmates in Missouri. Wait…What?!

22% of nonprofits are unaware of a critical piece of federal legislation that allows them to opt out of their state tax-rated unemployment system and pay only for their own unemployment claims, found the Division of Nonprofit Research at UST in its most comprehensive market research study to-date.

This option, which has been available exclusively to 501(c)(3) organizations since 1972, allows nonprofits to stop over paying into their state tax-rated system and offers substantial long-term savings for those employers who choose to become direct, or self-, reimbursing agencies.

“Our state has increased its costs to most employers so I’m shocked that not all nonprofits are looking at this option,” said one study participant who has already opted out of their state unemployment insurance system.

By opting out of the state tax-rated system, which typically causes employers to pay $2.00 in taxes for every $1.00 in actual benefits that is paid to their former employees, most nonprofits are able to save money and do significantly more with their budget.

“It wasn’t until after my first full year with UST that I started to believe it was not too good to be true. We received our audit and a refund and I thought ‘Wow, we really have a credit here,’” wrote another study participant.

Offering valuable savings in both the short and long-term, opting out of the state system does have several drawbacks for agencies that elect to become direct reimbursing without joining a trust like UST or other program.
 

  • Cash flow volatility when unexpected claims arise
  • State overpayments made in error
  • Difficulty in monitoring for fraudulent claims

“I’m always looking to save money and get more services for my clients,” said one nonprofit HR consultant, “I push the idea of UST for giving them an added resource. [With UST] They’ll have somebody on their side who can help them.”

To read the online press release about the Division’s findings, go here.

All information and quoted materials were pulled from a study conducted at UST, which was released at the end of the 1st quarter of 2012. The study surveyed almost 300 nonprofit agencies to identify key data about how nonprofits understand and utilize their unemployment tax options

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12/09/12 6:16 PM

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UST maintains a secure site. This means that information we obtain from you in the process of enrolling is protected and cannot be viewed by others. Information about your agency is provided to our various service providers once you enroll in UST for the purpose of providing you with the best possible service. Your information will never be sold or rented to other entities that are not affiliated with UST. Agencies that are actively enrolled in UST are listed for review by other agencies, UST’s sponsors and potential participants, but no information specific to your agency can be reviewed by anyone not affiliated with UST and not otherwise engaged in providing services to you except as required by law or valid legal process.

Your use of this site and the provision of basic information constitute your consent for UST to use the information supplied.

UST may collect generic information about overall website traffic, and use other analytical information and tools to help us improve our website and provide the best possible information and service. As you browse UST’s website, cookies may also be placed on your computer so that we can better understand what information our visitors are most interested in, and to help direct you to other relevant information. These cookies do not collect personal information such as your name, email, postal address or phone number. To opt out of some of these cookies, click here. If you are a Twitter user, and prefer not to have Twitter ad content tailored to you, learn more here.

Further, our website may contain links to other sites. Anytime you connect to another website, their respective privacy policy will apply and UST is not responsible for the privacy practices of others.

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