Historic number of unemployment payments could cause Texas business owners to see a tax increase

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Tuesday, December 15, 2020
TX businesses could see tax increase due to high unemployment payouts
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An increase in unemployment tax rate for businesses would also mean an increase in prices for items for customers. ABC13's Nick Natario breaks down why this increase might be coming.

HOUSTON, Texas (KTRK) -- Unless federal or state funding comes soon, business owners in Texas could soon be hit with a tax increase to cover unemployment benefits paid out during the pandemic.

La Taste owner, Patrick Meeks, normally receives the unemployment business tax rate in December, but so far, it hasn't arrived.

"Now that you mention it, I would've wondered at some point because I'm particularly sensitive to that," Meeks recalled.

For 35 years, he's owned La Taste in Rice Village. But 2020 hasn't been easy for the owner, who's had to make tough decisions with his employees.

He said an increase to the unemployment tax rate wouldn't impact his business too much, but he knows it would hurt others.

"We all understand why there's unemployment insurance, but it is another nail that gets heavier and heavier with each day," Meeks explained.

Meeks said a tax increase would be felt by employees and customers.

"You're just going to have to cut corners and perhaps raise prices, reduce services, reduce hours, reduce personnel. You have to find ways to make up for that," Meeks said.

In Texas, unemployment benefits are funded by businesses. Each year, the state sends owners the new tax rate in December.

This year, the state won't tell owners the new rate for another couple months. Officials are waiting to see if federal or state lawmakers provide funding, so it doesn't have to come from business owners.

"We know if we put in a rate now, and we lock that in, and later information shows we didn't need to go that high, then we've hurt businesses even more," Texas Workforce Commission deputy communications director, James Bernsen, explained.

Business owners will receive the new tax rates in February.

Bernsen said another way to keep rates low is to stop fraud.

So far, Texas has seen a lot.

The agency has had nearly 20,000 fraud claims, which is only about 0.3% of all claims, but last year, it was about 1,800.

If you receive notice of benefits and didn't lose your job, or are on benefits and get a wrong notice of address change, you should contact Texas Workforce Commission, not only to help business owners, but yourself.

"You might think it's not going to hurt me because we'll block it, but what's going to happen is if we block that account and then later you lose your job, and you need benefits, that account may still be blocked," Bernsen explained.