Since the beginning of the COVID-19 pandemic, $1.5 billion in benefits have been paid out to employees across America who lost their job through no fault of their own. Throughout this time, employers were financially responsible for paying out these benefits, and faced a negative impact on their experience rating if they failed to comply. However, on December 10, 2020, Maryland Governor Larry Hogan issued an executive order waiving all charges of COVID-19 benefits to employers.
How will the new Executive Order affect my business?
The new executive order will actually benefit Maryland business, because not only will you no longer be responsible for paying unemployment benefits, but your tax rate will ultimately be reduced. The State of Maryland will be using the 2020 benefit ratio to calculate an employer’s 2021 tax rate. The tax rate will be based on the employer’s experience prior to the pandemic and will exclude the 2020 fiscal year. Instead, the state will use 2017, 2018, and 2019 fiscal years. All employers will be taxed under Table F.
Employers should note that there has been a change in the Tax Table and therefore, they will still see an increase in their tax rate in 2021. However, because the State of Maryland will be keeping the 2020 benefit ratio going into 2021, employers’ tax rates will be reduced in comparison to what they would have been without the executive order.
What are the next steps?
All employers in Maryland should have received an email on December 10th detailing the new information. They should not, however, take any action immediately. Towards the end of December, employers will receive their preliminary 2021 tax rate from The Division of Unemployment Insurance through their BEACON 2.0 portal. In early 2021, employers will then receive their 20201 Experience Rate Notice; they will also be able to apply for payment plans through their BEACON 2.0 portal.
The new executive order represents a measure of relief for Maryland employers who had previously been financially responsible for paying out unemployment benefits to their employees who were laid off due to the COVID-19 pandemic. As of 2021, Maryland employers will no longer have to pay out the benefits and as a result, will see a reduction in their taxes.
Questions about how this new executive order affects your Maryland business? Ask our team at BradyRenner CPAs today >>
Image credit: Photo by Sora Shimazaki from Pexels