About Reporting and Payment of Taxes

Who must pay unemployment taxes?

All non-agricultural employers who during the current or preceding year had one or more persons employed at any time during 20 or more weeks, or paid $1,500 or more in wages in a calendar quarter. Persons paying $1,000 or more in wages for domestic services in a calendar quarter in either the current or preceding year. Employers of agricultural labor who during the current or preceding year had 10 or more persons employed at anytime during 20 weeks, or paid in any quarter $20,000 or more in cash wages for agricultural labor. For more information, please check out the Employer's Guide to Unemployment Insurance in North Dakota.

What is the taxable wage base?

Each year the taxable wage base is recalculated for the next calendar year as 70% of the statewide average annual wage. The current year taxable wage base can be found by clicking on the following link, then choosing the current year Tax Rate Table.

What are excess wages and how are they calculated?

Excess wages are those wages paid to an employee this quarter that are over the taxable wage base for the year. DO NOT ACCUMULATE THE EXCESS WAGES ON THE QUARTERLY REPORT. Only report the excess wages for that quarter.

What are the tax rates in North Dakota?

The tax rates vary depending on the employer's experience with the unemployment insurance (contributions paid and benefits charged). Beginning in 2000 there are two tax rate schedules, Positive Balance and Negative Balance. Tax rate schedules for the current year and previous years can be found by clicking on the following link, then choosing the Tax Rate Table by year:

What is the rate for new employers?

Tax rates for new employers can be found by clicking on the following link, then choosing the Tax Rate Table for the appropriate year:

When does our rate change?

Unemployment Insurance Tax Rates are recalculated each year after September and are effective on January 1.

Who are employees?

If your business is a:

  • Sole proprietorship - all persons performing services for you except: services performed by your spouse, minor children, or parent
  • Partnership - family members are excluded only if they have an exempting relationship with each partner
  • Corporation - all persons performing services are employees, including officers
  • Limited Liability Company (LLC) - Managers of LLCs that are treated as corporations for federal income taxation and all LLC managers who are not members are considered employees.

Corporations and LLCs may apply to exclude officers/managers with 25% or more ownership from employment if an application to exclude those wages is filed in January of any year or within 60 days of the formation of the corporation/LLC.

Why do corporate officers wages have to be reported when they will never be able to collect unemployment benefits?

The North Dakota Unemployment law specifically defines corporate officers and certain limited liability company managers (see previous question) as employees if they work for their respective companies. You may choose to be excluded from coverage by applying to do so during the month of January of any year, or within 60 days of formation of the corporation/LLC. However, you may still be liable for the Federal Unemployment Tax, which will be higher if you are not covered under the state tax. You should take this into consideration before deciding whether to apply to exempt corporate officers from coverage.

Wages paid to corporate officers and limited liability company managers are insured and can qualify for benefits. Ownership criteria must be considered and may cause some to be denied benefits. The primary factor in determining eligibility for corporate officers or limited liability company managers is whether the individual continues to maintain ownership interest in the corporation. To establish whether an individual had actually ceded his/her interest in the corporation, the individual must show that they have given up their ownership interest in the corporation or have dissolved the business interest.

Business owners (sole proprietorship, partnership) are not defined in law as employees and consequently are not insured nor are wages taxed for unemployment insurance.

How are limited liability company managers' earnings handled?

The North Dakota Unemployment law specifically defines corporate officers and certain limited liability company managers (see previous question) as employees if they work for their respective companies. You may choose to be excluded from coverage by applying to do so during the month of January of any year, or within 60 days of formation of the corporation/LLC. However, you may still be liable for the Federal Unemployment Tax, which will be higher if you are not covered under the state tax. You should take this into consideration before deciding whether to apply to exempt corporation officers from coverage.

Wages paid to corporate officers and limited liability company managers are insured and can qualify for benefits. Ownership criteria must be considered and may cause some to be denied benefits. The primary factor in determining eligibility for corporate officers or limited liability company managers is whether the individual continues to maintain ownership interest in the corporation. To establish whether an individual had actually ceded his/her interest in the corporation, the individual must show that they have given up their ownership interest in the corporation or have dissolved the business interest.

Business owners (sole proprietorship, partnership) are not defined in law as employees and consequently are not insured nor are wages taxed for unemployment insurance.

If I've been paying in on myself, why can't I draw unemployment insurance if my business closes?

Business owners (sole proprietorship, partnership) are not defined in law as employees and consequently are not insured nor are wages taxed for unemployment insurance. You should not list yourself on your North Dakota unemployment insurance quarterly reports.

Must out-of-state residents be reported?

Yes, if their principal place of employment is in North Dakota. If their principal place of employment is in another state and their work in North Dakota is temporary or transitory in nature, their wages should be reported to the state where principally employed.

How do I register?

To register, you may do one of the following:

  • Contact the Unemployment Insurance division, Tax & Field Services section at Job Service North Dakota
  • Download the Report to Determine Liability (PDF: 4 pages / 840 KB)
How do I report and pay the taxes due?

After you are registered, you must file an Employer's Contribution and Wage Report each calendar quarter. Forms will be mailed to you each quarter and may be filed online through UI EASY through secure FTP, by submitting diskette, cd-rom or magnetic tape (using the ICESA format) or by using the traditional paper method. Reports and payment must be submitted by the end of the month following the quarter.

You may also contact the Unemployment Insurance Field Representative at the Job Service Customer Service Office in your area.

How does it affect my account when someone draws unemployment against me?

Benefit payments are charged to an employer's account in proportion to the wages paid by the employer during the base period. "Base period" means a 12-month period consisting of the first four of the last five completed calendar quarters preceding the date the employee filed a claim.

Why did my unemployment rate increase?

An increase to your tax rate can occur as a result of several factors including:

  • an increase in the average taxable payroll
  • benefits charged against your account *
  • an increase to the rates in the tax rate schedule

* Note: Benefit payments are charged to an employer's account in proportion to the wages paid by the employer during the base period. "Base period" means a 12-month period consisting of the first four of the last five completed calendar quarters preceding the date the employee filed a claim.

How are unemployment rates figured?

The rates are determined by first calculating the amount of your cumulative reserve (the total taxes you have paid since you started paying minus the total benefits charged to your account) to determine if your account has a positive or negative balance. This then determines which tax rate schedule applies. Next the amount of your six-year reserve (the total taxes you have paid in the last six years minus the total benefits charged to your account in the last six years) is divided by your average taxable payroll in the last three years. This calculation result is a reserve ratio. The reserve ratio is then applied to the appropriate tax rate schedule (Positive Balance or Negative Balance) to determine your tax rate. The higher your reserve ratio, the lower your tax rate.

Why are my unemployment tax rates so high when I haven't had a claim in a long time?

The rates are determined by first calculating the amount of your cumulative reserve (the total taxes you have paid since you started paying minus the total benefits charged to your account) to determine if your account has a positive or negative balance. This then determines which tax rate schedule applies. Next the amount of your six-year reserve (the total taxes you have paid in the last six years minus the total benefits charged to your account in the last six years) is divided by your average taxable payroll in the last three years. This calculation result is a reserve ratio. The reserve ratio is then applied to the appropriate tax rate schedule (Positive Balance or Negative Balance) to determine your tax rate. The higher your reserve ratio, the lower your tax rate.

If I lay a person off and he/she only files for five weeks, how much will I have to pay?

The rates are determined by first calculating the amount of your cumulative reserve (the total taxes you have paid since you started paying minus the total benefits charged to your account) to determine if your account has a positive or negative balance. This then determines which tax rate schedule applies. Next the amount of your six-year reserve (the total taxes you have paid in the last six years minus the total benefits charged to your account in the last six years) is divided by your average taxable payroll in the last three years. This calculation result is a reserve ratio. The reserve ratio is then applied to the appropriate tax rate schedule (Positive Balance or Negative Balance) to determine your tax rate. The higher your reserve ratio, the lower your tax rate.

An increase to your tax rate can occur as a result of several factors including:

  • an increase in the average taxable payroll
  • benefits charged against your account *
  • an increase to the rates in the tax rate schedule

* Note: Benefit payments are charged to an employer's account in proportion to the wages paid by the employer during the base period. "Base period" means a 12-month period consisting of the first four of the last five completed calendar quarters preceding the date the employee filed a claim.

Why is my account being charged when the individual went to work for another employer and then quit or was fired from that job?

An employer's account being charged depends on several factors. If you are a reimbursable employer, your account will always be charged for any benefits that Job Service pays to former workers with your wages in the base period. If you are a tax rated employer, your account may or may not be charged depending on the circumstances. These may include: did the employee voluntarily quit working for you, was the employee fired for misconduct, was the employee working for you part time and continues to do so under the same working agreement, is the person being trained under an approved training program, etc. Because of the many factors that can influence the charging, each determination is made on a case by case basis. In all cases, you must respond to the notice you receive from Job Service advising that this person has filed a claim for benefits. If no response is received, the determination will be made from the information available.

The amount of benefits a person receives depends on the amount earnings they received during a "base period" of time from all their employers. (Base period means a 12-month period consisting of the first four of the last five completed calendar quarters at the time the employee filed a claim). The amount of the benefits charged to an employer's account is proportionate to the wages from each employer.

Why is my account being charged when the employee was fired?

An employer's account being charged depends on several factors. If you are a reimbursable employer, your account will always be charged for any benefits that Job Service pays to former workers with your wages in the base period. If you are a tax rated employer, your account may or may not be charged depending on the circumstances. These may include: did the employee voluntarily quit working for you, was the employee fired for misconduct, was the employee working for you part time and continues to do so under the same working agreement, is the person being trained under an approved training program, etc. Because of the many factors that can influence the charging, each determination is made on a case by case basis. In all cases, you must respond to the notice you receive from Job Service advising that this person has filed a claim for benefits. If no response is received, the determination will be made from the information available.

The amount of benefits a person receives depends on the amount earnings they received during a "base period" of time from all their employers. (Base period means a 12-month period consisting of the first four of the last five completed calendar quarters at the time the employee filed a claim). The amount of the benefits charged to an employer's account is proportionate to the wages from each employer.

The employee we have isn't working out. If we just lay the employee off, how much will he/she get?

The amount of benefits a person receives depends on the amount earnings they received during a "base period" of time from all their employers. (Base period means a 12-month period consisting of the first four of the last five completed calendar quarters at the time the employee filed a claim). The amount of the benefits charged to an employer's account is proportionate to the wages from each employer.

When purchasing a company, can I assume their experience rate?

The acquisition of a former owner's tax rating account may be possible either voluntarily or mandatorily depending on certain circumstances:

An employer that acquires all or part of another employer and continues essentially the same business activity of the acquired business may request transfer of the experience record, reserve balance, and benefit experience of the acquired business when submitting the Report to Determine Liability to Job Service North Dakota.

An employer acquiring (successor) all or part of another employer (predecessor) WILL BE REQUIRED TO assume all or part of the experience record, reserve balance (positive or negative) of the old business (predecessor) if:

  • The predecessor owned or controlled the successor, or the successor owned or controlled the predecessor; OR
  • Both the predecessor and successor were owned or controlled by the same interests.

For further information on a specific case you may:

    Contact your local field representative from Job Service North Dakota

How can someone file or collect unemployment if they quit or were fired?

The reason for separation from the "most recent employer" determines if an individual can qualify for unemployment benefits. Many factors are considered when determining eligibility for benefits, consequently each determination is made on a case by case basis. However, in general terms it is possible to quit employment and still be eligible for benefits if the reason for quitting is attributable to the employer. Some factors considered are the degree of risk to the employee's health, safety, and morals, or whether there was a substantial change in the conditions of employment such as driving distance, wages, hours, etc.

It is also possible for an individual who has been discharged to receive benefits. The employer, in this case, has the burden of proof to show that misconduct occurred. Again, because each case is unique, determining an individual's eligibility is made on a case by case basis. Some factors to consider are whether there was negligence on the part of the individual, whether the individual acted willfully, if company policy was violated, or if the individual's actions represent a substantial disregard of the employer's interests.

Are 401K or tax deferred plans taxable?

Amounts deducted from employees pay for any purpose are considered wages. Employer paid contributions for certain health and retirement purposes are not taxable. See NDCC 52-01-01.31 for details.

Can I make a voluntary contribution to lower my rate?

Employers may make voluntary contributions to their job insurance account to improve their contributions-to-benefits balance and thereby decrease their assigned tax rate. If your cumulative lifetime balance is negative, you must first decide if you want to improve your rate within the negative schedule or to the positive schedule. To figure the amount required, using the information provided to you by Job Service North Dakota in the latest "Job Insurance Tax Rate and Taxable Wage Base Notice", multiply your average taxable payroll by the six-year reserve ratio needed for the desired rate (within the appropriate schedule, Positive Balance or Negative Balance) and subtract your present six-year reserve. The payment of a voluntary contribution can only be made from the time the new rate is assigned (early December) through April 30th of the calendar year to which that new rate applies.