Unemployment Insurance Tax (FUTA / SUTA): Minnesota
Federal law and guidance on this subject should be reviewed together with this section.
Author: Sam Diehl, Gray Plant Mooty
- Minnesota's common law test is similar to the Internal Revenue Service's test to determine whether an individual is considered an employee for unemployment insurance (UI) coverage purposes. The key factor under the test is the extent of the employer's right to control an individual's work. See Common Law Test.
- All wages for covered employment must be reported, but UI tax is only paid on each employee's gross wages up to the state taxable wage base. See UI Taxable Wages and Wage Base.
- Employers are assigned UI contribution rates based on their unemployment experience rating. This rate is generally determined by dividing the total unemployment benefits paid to former employees, by the total taxable wages paid to all of the employer's employees over time. See Contribution Rates; Experience Rating.
- Employers in Minnesota may make voluntary contributions, by April 30 in any given year, to lower their UI tax rates. See Voluntary Contributions.
- Joint or combined accounts are permitted if an employer acquires all or part of a predecessor employer and shares 25 percent or more common ownership with the predecessor. See Joint or Combined Accounts.
- A former employee's eligibility for UI benefits is normally determined based on the reason for the individual's separation from employment. Both employers and UI applicants may provide information to influence the determination and may also appeal determinations, subject to certain procedures. See Eligibility for UI Benefits.
- Employers that pay UI tax must submit a quarterly wage detail report electronically to the Minnesota Department of Employment Development (DEED). Employers with an active employer account must submit a zero-wage report even when no covered wages were paid in a quarter. There are penalties for late, incomplete or incorrect reports. See Quarterly Reporting Requirements.
- Special UI provisions apply to government, nonprofit and tribal employers. These employers are assigned reimbursing accounts, unless they elect to pay UI taxes. Certain religious employers are not required to participate in the UI system. See Government, Nonprofit and Tribal Employers.
- An employer's UI account will not be relieved of benefit charges for an overpayment made due to the employer's failure to timely or adequately respond to a request for information about the claim.See Benefit Overpayments.
- Minnesota employers are required to maintain certain records and to keep them for a prescribed time period in the event of a DEED audit. Multiple worksite reporting is also mandatory for employers that operate businesses from more than one location under one UI Account Number. See Recordkeeping Requirements; Multiple Worksite Reporting.