NY Re-Employment Service Fund: Rates, Reporting, and Penalties

Every employer liable for New York unemployment insurance owes an additional 0.075% of quarterly taxable payroll to the New York Re-Employment Service Fund, reported on line 5 of Form NYS-45 with your regular UI return.¹² The surcharge is small, but the penalties for missing it track the general UI enforcement framework and can compound quickly.

What You Owe

The rate is a flat 0.075% for every liable employer. It does not vary with your experience rating the way UI contributions do, which run between 1.625% and 9.425%. New employers pay a combined flat rate of 4.1% that already includes the surcharge.

You owe the 0.075% only on wages inside the state’s UI taxable wage base. For 2026, that base is $17,600 per employee. Starting this year, the wage base permanently adjusts each January 1 to 18% of the state’s average annual wage, rounded up to the nearest $100.³ For a single employee earning at least the base amount, the annual Re-Employment Service Fund contribution comes to $13.20.

There is a statewide cap. Once total collections reach $35 million in a calendar year, additional amounts collected are redirected to the unemployment insurance general account rather than the fund.¹ As an individual employer you still owe the surcharge on every quarterly filing; the reallocation happens on the state’s side.

How to Report and Pay the Surcharge

The surcharge rides on Form NYS-45, the quarterly combined withholding, wage reporting, and unemployment insurance return you already file. Multiply your quarterly UI taxable payroll by 0.00075 and enter the result on line 5.²

Filing periods are the standard calendar quarters: January through March, April through June, July through September, and October through December. There is no separate form, no separate payment channel, and no separate deadline. If your NYS-45 is filed accurately and on time, the surcharge is handled.

The Department of Labor and the Department of Taxation and Finance cross-check wage reports against other filings, so underreported wages or workers who should have been classified as employees tend to surface through the same audits that catch UI issues.

Federal Tax Treatment

Re-Employment Service Fund contributions are deductible as a business expense on your federal return. The IRS treats payments to state unemployment compensation funds as deductible employment taxes, and this surcharge falls within that category.⁴ Sole proprietors take the deduction on Schedule C; other structures deduct on their respective returns.

There is also a FUTA angle worth watching. The standard FUTA rate is 6.0% on the first $7,000 of wages per employee, but employers generally receive a 5.4% credit for paying state unemployment taxes on time, bringing the effective federal rate to 0.6%.⁵ If a state borrows from the federal government to pay UI benefits and does not repay on schedule, that credit is reduced and employers in the state pay more FUTA. New York repaid its outstanding advances before November 10, 2025, so employers were not subject to a FUTA credit reduction for the 2025 tax year.⁶ Keeping current on state contributions, including this surcharge, helps keep the state out of credit-reduction territory in future years.

What the Fund Pays For

The fund is narrower than the name suggests. Under Section 552-A of the Labor Law, the money is spent on “automated systems and staff to provide enhanced re-employment services and claimant management activities for unemployment compensation claimants.”⁷ In practical terms, it pays for the technology platforms and career center staffing the Department of Labor uses to move UI claimants back into work.

It is not the same as the Section 599 training program, which lets UI recipients enrolled in approved full-time training keep collecting benefits without an active work search.⁸ The surcharge funds re-employment infrastructure, not the 599 benefit extension and not general workforce development.

Penalties for Late or Missing Contributions

Enforcement mirrors general UI tax rules, and the numbers escalate quickly. If you file NYS-45 late, New York imposes a penalty of 5% of contributions owed for the first month, plus 5% for each additional month unfiled, up to 25%. The minimum penalty is $100 per occurrence, even when the underlying amount owed is smaller.⁹

There is a second consequence that outlasts the penalty. Contributions unpaid for more than 60 days past the due date are not credited to your employer account; they go to the general account instead. Those payments will not help lower your experience-rated UI tax rate even after you pay them, which raises your UI rate for years.⁹

Employers who knowingly manipulate business transfers or structures to obtain a lower contribution rate face the greater of 10% of prior-year total taxable wages or $10,000, and advisors who help arrange those transactions face a separate $10,000 civil penalty.⁹ Repeated or willful violations can trigger liens, garnishments, and stop-work orders that halt operations until the balance clears.

Appealing an Assessment

If you disagree with a contribution assessment, audit finding, or penalty, you can request a hearing before an Administrative Law Judge at no cost. The ALJ operates independently of the Department of Labor and decides on the evidence both sides present.¹⁰ You can bring counsel and submit payroll records, tax filings, and any documentation supporting your position.

Before the ALJ stage, the Department of Labor typically offers a conference to resolve the issue informally. If that does not settle it, the case moves to a formal hearing.¹¹ Your determination notice states the deadline for requesting the hearing; missing that date generally forfeits your right to appeal, so calendar it as soon as the notice arrives.

If the ALJ rules against you, the next step is the Unemployment Insurance Appeal Board, an independent body appointed by the governor. From there, appeals move to the Appellate Division of the Supreme Court, Third Judicial Department, and ultimately the New York State Court of Appeals.¹¹ Each level narrows its review, so build the record at the ALJ stage.

1
New York State Senate. New York Labor Law 581-B – Contributions to the Re-Employment Service Fund
2
New York State Department of Taxation and Finance. Form NYS-45 Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return
3
New York State Department of Labor. Unemployment Insurance Benefit Reimbursement vs. Contribution Option Information
4
Internal Revenue Service. Tax Guide for Small Business
5
Internal Revenue Service. FUTA Credit Reduction
6
Federal Register. Notice of the Federal Unemployment Tax Act (FUTA) Credit Reductions Applicable for 2025
7
New York State Senate. New York Labor Law 552-A – Re-Employment Service Fund
8
New York State Department of Labor. 599 Program
9
New York State Senate. New York Labor Law 581 – Employer Experience Rating
10
New York State Department of Labor. Hearings Before Unemployment Insurance Administrative Law Judges: Questions and Answers
11
Department of Labor. Requesting a Hearing