Minnesota Unemployment Tax – Retro-Active Change

May 18, 2022 by Jason Kindseth
State and Local Taxation

As I wrote about on April 12th there was a large increase in Minnesota unemployment taxes for Q1 2022. After nearly all companies filed their Q1 unemployment tax returns (due 5/2) the Minnesota Legislature passed a “Trust Fund Replacement Bill” on April 29. This change reduces the unemployment tax rates and removes the surcharges that caused additional taxes. This change is beneficial for businesses, but since it is retro-active it does create some headaches to resolve.

Minnesota is sending out letters to affected businesses detailing the changes to the tax and letting them know that their credit (overpaid tax after the recalculation) is available to review online. Businesses will need to log into their accounts to review the credit. I would also recommend checking with your payroll provider to make sure the tax rate is up to date and the service is aware of the credit on your account.

Minnesota does mention refunds in the letters they send, but notes that refund requests could take months to process. If your business has a small refund or doesn’t need the money immediately, it is easier to use the credit to offset 2Q taxes (due in July) vs. requesting a refund that might not come for several months.

Those wanting more information on the topic can check the MN UI website.