Employer's Guide to Unemployment Insurance Tax in North Dakota

Everything employers need to know about paying unemployment insurance taxes in North Dakota.

If your small business has employees working in North Dakota, you’ll need to pay North Dakota unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In North Dakota, state UI tax is just one of several taxes that employers must pay. Other important employer taxes, not covered here, include federal UI tax, and state and federal withholding taxes.

Different states have different rules and rates for UI taxes. Here are the basic rules for North Dakota’s UI tax.

Register With Job Service North Dakota

As a North Dakota employer, your small business must establish a North Dakota UI tax account with Job Service North Dakota (JSND). You must register for a UI tax account within 20 days after first employing workers. Once registered, you’ll be issued a UI account number as soon as you’re business is liable under the state’s unemployment compensation law. To register, use Form SFN 41216, Report to Determine Liability. Blank forms are available for download from the Forms section of the JSND website. There is no fee to register your business with JSND.

Note: To establish your North Dakota UI tax account, you’ll need a federal employer identification number (EIN). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.

Rules for UI Tax Liability

As a for-profit employer in North Dakota, you generally are liable for state UI taxes as soon as you meet one of these conditions:

  • You paid gross wages of $1,500 or more (to one or more employees) in any calendar quarter in the current or preceding calendar year.
  • You have one or more persons in employment for any part of a day in 20 different weeks in a calendar year (the weeks of employment do not need to be consecutive).
  • You acquire all or part of a business of an employer already covered under North Dakota’s UI law.
  • You are liable under the Federal Unemployment Tax Act (FUTA). An employer liable for FUTA becomes immediately liable to North Dakota Unemployment Compensation Law when they hire a worker in North Dakota.

Different rules, not covered here, apply to agricultural (farm) workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.

One piece of good news is that state UI tax payments generally can be credited against your FUTA taxes.

Wage Base and Tax Rates

UI tax is paid on each employee’s wages up to a maximum annual amount. That amount is known as the taxable wage base. In recent years in North Dakota, the taxable wage has increased by about $2,000 each year. It recently has exceeded $35,000. For current wage base information, check the JSND website.

The state UI tax rate for new employers, also known as the standard beginning tax rate, also can change from one year to the next. In recent years, it generally has been a little over 1%. Established employers are subject to a lower or higher rate than new employers depending on an “experience rating.” This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.

File Quarterly UI Tax Reports and Payments

In North Dakota, UI tax reports and payments are due by the end of the month following each calendar quarter. In other words, reports are due by the following dates:

Quarter

Due Date

Earliest Online Filing Date

January 1 – March 31

April 30

March 15

April 1 – June 30

July 31

June 15

July 1 – September 30

October 31

September 15

October 1 – December 31

January 31

December 15

If the due date falls on a weekend or a holiday, the due date is moved forward to the next business day following the weekend or holiday.

Smaller employers can file reports and payments online or on paper. Larger employers (24 or more employees) must file online. To file online, use North Dakota’s Unemployment Insurance Employer Account System (UI EASY) system. To file on paper, use Form SFN 41263, Employer’s Contribution and Wage Report. You can download blank forms from the Forms section of the JSND website. With the UI EASY system, you can pay by Automated Clearing House (ACH) Debit transaction. Otherwise, you can pay electronically using Electronic Fund Transfer (EFT) or by a paper check.

Quarterly reports are due each quarter as long as your UI account is active, even if no wages were paid in the quarter, or if all wages are excess wages with no tax due. If you paid no wages during the quarter, you should indicate “none” on the report, and submit the report in a timely manner. You must file the required Contribution and Wage Reports by the due dates even if the total contribution payment cannot be submitted with the report. If you fail to file a report by the due date you will be subject to penalties. Also, if you fail to make full payment by the due date, you will be subject to interest.

Post a Notice (Poster)

You are required to post a notice (poster) regarding state unemployment claims in a conspicuous place for all employees. The poster informs employees that your business is liable for contributions under the North Dakota Unemployment Compensation Law. The notice also includes information regarding workers’ rights and responsibilities under the law. JSND should send you a notice when you first become liable for UI taxes. You also can download a poster from the Forms section of the JSND website that meets all legal requirements.

Do Not Misclassify Employees as Independent Contractors

Employers who use independent contractors rather than hiring employees are not subject to the UI tax. However, it’s important that you do not misclassify an employee as an independent contractor. If you do misclassify an employee, you could be subject to penalties or fines.

Using Payroll Service Companies

You may decide that it’s easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.

Additional Information

This article touches on only the most basic elements of North Dakota UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and JSND websites for the latest information. JSND also has an Employer’s Handbook (Form JSND 4036) that you can download from the Resources section of the JSND website. In addition to state UI tax, employers have other responsibilities not covered in this article such as federal UI tax, state and federal withholding taxes, and required reporting of new hires. You can get more information about other small business tax issues in other articles here on Nolo.com.

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