(a) Reduction in unemployment tax effort. (1) For purposes of
paragraph (a)(1) of Sec. 606.20, a reduction in a State's unemployment
tax effort will have occurred with respect to a taxable year if any
action is or was taken (legislative, judicial, or administrative,) that
is effective during the 12-month period ending on September 30 of such
taxable year, which has resulted in or will result in a reduction of the
amount of contributions paid or payable or the amounts that were or
would have been paid or payable but for such action.
(2) Actions that will result in a reduction in tax effort include,
but are not limited to, a reduction in the taxable wage base, the tax
rate schedule, tax rates, or taxes payable (including surtaxes) that
would not have gone into effect but for the legislative, judicial, or
administrative action taken. Notwithstanding the foregoing criterion, a
reduction in unemployment tax effort resulting from any provision of the
State law enacted prior to August 13, 1981, will not be taken into
account as a reduction in the State's unemployment tax effort for the
purposes of this section.
(b) Net decrease in solvency. For purposes of paragraph (a)(2) of
Sec. 606.20, a net decrease in the solvency of the State's unemployment
compensation system will have occurred with respect to a taxable year if
any action is or was taken (legislative, judicial, or administrative),
that is effective during the 12-month period ending on September 30 of
such taxable year, which has
resulted in or will result in an increase in benefits without at least
an equal increase in taxes, or a decrease in taxes without at least an
equal decrease in benefits. Notwithstanding the foregoing criterion, a
decrease in solvency resulting from any provision of the State law
enacted prior to August 13, 1981, will not be taken into account as a
reduction in solvency of the State's unemployment compensation system
for the purposes of this section.
(c) State unemployment tax rate. For purposes of paragraph (a)(3) of
Sec. 606.20, the State unemployment tax rate is defined in
Sec. 606.3(j). If such percentage is not a multiple of 0.1 percent, the
percentage shall remain unrounded.
(d) State five-year average benefit cost ratio. For purposes of
paragraph (a)(3) of Sec. 606.20, the average benefit cost ratio for the
five preceding calendar years is the percentage determined by dividing
the sum of the benefit cost ratios for the five years by five. If such
percentage is not a multiple of 0.1 percent, the percentage shall remain
unrounded.
