The recession caused Illinois and 20 state workforce agencies to have federal loan balances at the start of 2010 and 2011, triggering a credit reduction in the federal unemployment tax for 2011 that is payable in January 2012. Earlier this year, legislation to avoid the need for continued reliance on federal loans passed the Illinois House 114-0 and the Illinois Senate 53-1. The bi-partisan support was earned after months of negotiation with lawmakers and leaders with the business and labor communities. Had the agreement not been reached, 2012 taxes for many employers would have been higher.
The legislation allows Illinois to sell bonds to pay off the loan. Managing the debt this way is similar to refinancing a mortgage. It saves money because the interest rate on the bonds is anticipated to be lower than the federal interest rate. As a result, the federal tax rate for 2012 and beyond would also return to its normal level, with the credit reduction not expected to recur. This allows for an overall savings of more than $400 million over the next eight years. Businesses that have not laid-off workers will see larger savings.
The IDES is also requesting employer assistance in a renewed effort to prevent fraud. Employers are required to report persons hired or rehired within 20 days of their first day of payroll. Employees can be reported at www.ides.illinois.gov under the category of EMPLOYERS. Click on REPORT NEW HIRES. Be prepared to provide your Federal Employer ID Number (FEIN), and the name, address, social security number and hire date of the employee.