Tennessee Unemployment Insurance Update

Tennessee is no different than those states with “South” in the first part of their name. In the case of the Rocky Top state, all new employers must also file with the proper Tennessee unemployment insurance authorities. To be specific, you must file a Report to Determine Status/Application for Employer Number, or the LB-0441 form for short.

Like other forms with equally literal names in other states, the Report to Determine Status/Application for Employer Number form allows the Tennessee unemployment insurance tax authorities determine if you are liable to pay the taxes that finance the unemployment insurance system in the state. If you are liable, they will then assign you a number and open up an account for you in the system.

If that is the case with you, you will then be expected to report on your employee wages each quarter, and then pay taxes on them too. You can do so by using another form in the state arsenal of forms, the Wage and Premium Report, or LB-0456. The state also allows employers to report their employee wages through magnetic tape.

In general, most employers in the state of Tennessee are required to pay taxes into the state unemployment insurance trust fund on up to the first $7000 of each of their employee’s wages. New employers pay a 2.7 percent rate on this $7000, though employers in the construction and mining industries may be required to pay a higher rate on their employees as a new employer.

Then you remember what happens next. After three consecutive years as a new employer, the Tennessee employers then face what is called an “experience” tax rate. This tax rate is based on how well the company has “performed”—meaning, how many formers employees the company has had on unemployment insurance. If a company provides accurate and timely reports to the state, that also can help in making them a better performing employer.