Tax Savings

Unemployment Tax Savings

As a 501(c)(3), you have an exclusive advantage over for-profits:  You can opt out of your state’s unemployment tax system. Instead, you only reimburse the state dollar-for-dollar for benefits paid out to former employees.

For most nonprofits, this represents a substantial savings.  But it also presents your organization with cash flow risk if you have unanticipated unemployment claims, since the state requires that you pay for claims as they occur.

With UST, you receive savings and protection. UST manages cash flow risk by helping you build a reserve account that belongs to your organization, and protects your cash flow from unexpected unemployment expenses. In addition, you save money through:

  • Lower rates:  For the first two years, your organization receives 25% off the rate you paid to the state. Last year, new UST members for 2011 immediately saved an average $99.74 per employee.
  • Long-term savings:  In the third and subsequent years, your rates are determined by the Trust’s actuary and based on your organization’s actual claims. This has helped members save thousands annually.
  • No surcharges:*  With UST, you won’t have to worry about surcharges that often occur when a state’s unemployment funds become insolvent. *(Unless mandated in your state.)

Already a direct reimbursing employer? UST will help your organization save money through our expert claims services, cash flow management and investing for financial stability.

Long-Term Account Savings

When you join UST, your organization establishes its own account, which is considered a pre-paid asset.

The account is used to cover current claims, claims in process, and future claims, while adding a margin for any unexpected activity.  UST reimburses your state out of this account.

Because your organization owns its account, you’ll appreciate the following additional benefits:

  • Maximize cash flow:  Rather than being impacted by the cash flow risk of paying dollar-for-dollar on your own, your UST account allows you to spread your claims liability over the course of a whole year through quarterly rates.
  • Share in UST investment results:  UST’s assets are invested conservatively to preserve participants’ capital. Over the past 10 years, investment results have offset operation expenses for participants.
  • Builds assets:  Because you fund your own account, any positive account balance you carry from year to year is considered an asset to your organization—not an expense. If your organization ever decides to leave UST, the balance of your account will be returned, less any outstanding expenses.
  • Receive refunds:  Unlike any state tax-rated employment system, UST annually reviews and returns any excess funds accrued from favorable claims experience in the form of refunds. (Your organization may share in this special benefit after your third year of participation if you have a positive balance and claim history.)

Since 1986, UST has returned more than $33 million in refunds.”