Ariz. Admin. Code § 6-3-1715

Current through Register Vol. 30, No. 24, June 14, 2024

Section R6-3-1715 - Computation of Adjusted Contribution Rates

A. The fund means the Unemployment Compensation Trust Fund which shall include:

1. Funds which have been credited to the Trust Fund by the United States Treasury under the Employment Security Administrative Financing Act of 1954 (Reed Bill) on or before July 31 and which have not been appropriated by the Legislature.

2. The amount of contribution collections from experience rated employers consisting of all amounts deposited in the bank on or before July 31 for calendar quarters ending the preceding June 30.

3. The amount of contribution collections from experience rated employers deposited in the bank after July 31 which were received or postmarked on or before July 31 and which apply to calendar quarters ending the preceding June 30, but shall not include the amount of contribution credit balances (accounts payable) not refunded to the employer for calendar quarters ending the preceding June 30 or not used by the employer on or before July 31 for the payment of contributions, interest or penalty due.

4. The amount of payments in lieu of contributions consisting of all amounts deposited in the bank on or before August 31 for reimbursing benefits paid in calendar quarters ending the preceding June 30.

5. The amount of payments in lieu of contributions deposited in the bank after August 31 which were received or postmarked on or before August 31 and which apply to calendar quarters ending the preceding June 30, but shall not include the amount of contribution credit balances (accounts payable) not refunded to the employer for calendar quarters ending the preceding June 30 or not used by the employer on or before August 31 for the reimbursement of benefits paid, interest or penalty due.

6. The amount on deposit with the State Treasurer and/or the bank for payment of unemployment compensation benefits, for which benefit checks have not been issued on or before July 31.

7. The interest earned on monies in the fund during the twelve-month period immediately preceding the computation date and credited to the fund by the United States Treasury on or before October 31 following the computation date.

B. Total taxable payrolls of all employers during the twelve-month period immediately preceding the July 1 computation date shall be used in computing adjusted contribution rates for the next calendar year. If an employer's entire taxable payroll for the twelve-month period ending June 30 is reported on or before the following October 31, the reported payroll shall be used. If an employer's entire taxable payroll for the twelve-month period ending June 30 is not reported on or before the following October 31, the estimate made in accordance with A.R.S. § 23-731 and R6-3-1711(F) shall be used.

C. Total taxable payrolls for the preceding twelve-month period ending June 30 of employers whose accounts are inactive on October 31 of the year preceding the calendar year for which the adjusted rates are applicable shall be included with total taxable payrolls in the new employer rate group of two and seven-tenths percent.

D. Method of computation:

1. Compute the fund ratio by dividing the total assets of the fund by the total taxable payrolls.

2. Determine the required income rate using the table contained in A.R.S. § 23-730(3).

3. Compute the estimated net required tax yield by multiplying the total taxable payrolls by the required income rate and subtracting the interest earned as defined by A.R.S. § 23-730(3).

4. Compute the estimated yield from unadjusted contribution rates by:

a. Multiplying the taxable payrolls for employers ineligible for a reserve ratio by the new employer contribution rate of 2.7 percent.

b. Multiplying the taxable payrolls for inactive employers by the new employer contribution rate of 2.7 percent.

c. For all other employers, multiplying the unadjusted contribution rate for each reserve ratio defined in A.R.S. §§ 23-730(1) and 23-730(2) by the taxable payrolls for all employers having that reserve ratio.

d. Summing the results of steps (4)(a), (4)(b), and (4)(c)

5. Compute the unadjustable yield by:

a. Summing the estimated yields for employers ineligible for a reserve ratio and inactive employers.

b. If the estimated yield exceeds the estimated required tax yield, add the estimated yields for employers with a negative reserve balance and employers with a reserve ratio of 13% or more to the sum determined in (5)(a).

6. Compute the adjustment factor by dividing in the following manner:

the estimated required tax yield, less the unadjustable yield the estimated yield derived from unadjusted contribution rates, less the unadjustable yield.

7. Compute the adjusted contribution rates by multiplying the unadjusted contribution rates for each reserve ratio subject to adjustment by the adjustment factor and round the result to the nearest .01% (or down if there is no nearest .01 percent).

8. Compute the estimated average tax rate by dividing the net required yield by the taxable payrolls and round to the nearest .01 percent.

Ariz. Admin. Code § R6-3-1715

Former Regulation 40-12; Amended effective March 29, 1978 (Supp. 78-2). Amended effective November 15, 1978 (Supp. 78-6). Amended effective March 5, 1982 (Supp. 82-2). Amended effective December 23, 1985 (Supp. 85-6).