Introduction to Minnesota Unemployment Insurance Tax

This is the seventh post in the Employment Tax Law series. This series is dedicated to presenting individuals, sole proprietorships, and small to large businesses with a basic understanding of employment taxes, including the risks and responsibilities associated with those taxes.

The Minnesota Unemployment Insurance Tax, often referred to as SUTA tax, provides funds for paying unemployment compensation to workers who have lost their jobs. SUTA tax is collected from the employer. The Minnesota Unemployment Insurance Program is administered by the Minnesota Department of Employment and Economic Developent (MDEED). All employers that pay “covered” wages in Minnesota must register with the Minnesota Unemployment Insurance Program prior to the due date of the first quarterly wage detail report the employer is required to submit.

The taxable wage base is 60 percent of the average annual wages paid in Minnesota and varies from year to year. SUTA tax is paid on only the gross wages paid to each employee up to the taxable wage base for that year.

Employers are required to submit a wage detail report electronically before the last day of the month following the end of the calendar quarter. Employers with 50 employees or less must submit a SUTA tax payment electronically. All payments must be received by the last day of the month following the end of the calendar quarter.

Employers that fail to submit a quarterly wage detail report on the due date must pay a one-time fee of $10 per employee, calculated based on the highest of: the number of employees on the last wage detail report; the number of employees reported in the corresponding quarter of the prior year; or, if no report was ever submitted, the number of employees reported at the time of registration. The late fee may not be less than $250.

In the case where a quarterly wage detail report is submitted with incorrect information, the employer must pay a fee of $25 for each employee for whom the information is incorrect.