New York’s Private Sector Businesses Receive UI Debt Bill, Another Tax on State’s Employers


New York’s Private Sector Businesses Receive UI Debt Bill, Another Tax on State’s Employers
State Has Failed to Address Growing Debt for More Than 900 Days

ALBANY – This week, private sector employers across New York received yet another unemployment insurance tax bill from the New York State Department of Labor (DOL). Technically an “Interest Assessment Surcharge,” or IAS, this latest billing is intended to raise $130 million from employers to pay interest on federal loans used to assure unemployment insurance benefits during the height of the COVID pandemic. Peaking at more than $9 billion, the state’s outstanding federal loan balance remains at more than $6.5 billion.

Under existing law, the entirety of the federal advances, and interest costs, are repaid through increased payroll taxes on employers, with record-high federal and state payroll taxes likely lasting the rest of this decade until the federal debt is retired and the state’s UI fund balance restored. 

In March 2020, New York’s 100% “reduction in force” order – prohibiting most in-person employment – resulted in the loss of 1.6 million private sector jobs and a massive spike in UI claims and benefit payments, which quickly consumed the state’s UI fund reserves and required billions in federal borrowing to maintain benefit payments.

During the pandemic, more than 30 states borrowed federal funds for their UI programs, and all but one state, New York, have either paid back the debt or used a combination of state resources and federal aid to alleviate the burden on their private sector employers.  

“The IAS notice to employers is simply another tax on businesses who have been asking for relief for the past three years. Employers, particularly small businesses, should not be forced to pay the full cost of unemployment benefits driven by the state’s COVID response. Most other states have already taken steps to address this unfair cost burden on the private sector,” said Heather Mulligan, President & CEO of The Business Council

The Business Council and other business groups have been calling on the Governor and State Legislature to use federal emergency aid or state resources to help pay off this ongoing UI debt and provide UI tax relief to employers. In June, The Business Council unveiled a clock that monitors how many days have passed without New York lawmakers taking action to minimize the debt created by the state-mandated shutdowns.