New tax law sets equal penalty for all employers

The Bellingham Business Journal

A new law establishes equal penalties for all Washington state employers who fail to pay unemployment taxes on time.

“This new law improves the fairness of our tax system by issuing an equal penalty to all delinquent employers,” Employment Security Commissioner Karen Lee said. “This is one of several improvements by the governor and the legislature in recent years to make unemployment taxes more equitable.”

Before the change, delinquent employers were assigned the maximum possible tax rate, plus a penalty amount, regardless of whether their regular tax rate was 1 percent or 6 percent. Now, only a 1 percent penalty will be added to a delinquent employer’s regular rate, resulting in lower tax rates for most employers with overdue taxes.

For example, a delinquent employer with a regular tax rate of .95 percent jumped to 7.06 percent under the old law – the same fate as a delinquent employer with a regular tax rate of 6 percent. But starting in 2011, the employer with a rate of .95 percent will move to 1.95 percent and may have the opportunity to cut the penalty by .5 percent by entering into a payment contract with the Employment Security Department.

Delinquent rates can be avoided by making sure all unemployment taxes due through June 30 are paid in full by Sept. 30.

Employers that are delinquent a second year will be assigned a rate 2 percentage points higher than their regular rate, which is based mostly on layoff history. The more former workers collecting unemployment benefits, the higher an employer’s tax rate.

Employers having difficulty paying their taxes on time should call their district tax office as soon as possible to work out a payment agreement. For contact information, visit and type “district tax offices” in the search box.

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