Virgin Islands Government seal

Department of Labor

Unemployment Insurance

Introduction & Background

Important Highlights

Contributions

Federal Unemployment Tax Act (FUTA)

Experience Rating

Reimbursing Employers

Records, Reports, and Audits

Independent Contractors

Localized and Non-Localized Employment

Reciprocal Coverage

Combined Wage Claims

Interstate Claims

Benefit Payment Program

Employment Service

Forms

Glossary

FAQ'S

Important Highlights

The following is a capsule summary of the most significant aspects of an employer's rights and responsibilities under the law. Each of these points is discussed elsewhere in this handbook.

Required Record Keeping

An employer who pays wages to anyone in the Virgin Islands must maintain certain prescribed records which are to be retained for the current and at least the five preceding calendar years. These and other records relating to the employer's business must be available for inspection upon request. Failure to produce these records, when requested, is a violation of the law and may result in a penalty.

Reporting Requirements

When an employer begins business operations in the Virgin Islands, he is required to notify the Agency promptly in order to have his tax status determined.

Contributions and wage reports are required for each calendar quarter that an employer is covered under the law. The respective due dates are April 30, July 31, October 31, and January 31. The forms for making those reports are mailed to employers well in advance of the due dates.

Failure to file reports and pay the contributions (taxes) due by the due dates may result in assessments of interest and penalties; it may also adversely affect an employer's contribution rate in future years. SUCH REPORTS ARE REQUIRED EACH QUARTER, EVEN THOUGH AN EMPLOYER MAY NOT HAVE PAID ANY WAGES DURING THE QUARTER.

Whenever an employer discontinues business in the Virgin Islands, transfers his business, or changes his legal form (e.g. from a partnership to corporation), he must notify the agency. This information may be noted on the final quarterly tax report or in letterform addressed to the agency's Director or Chief of Tax.


Employment Subject To Law

Service performed for any employing unit in the Virgin Islands is subject to contributions, unless specifically excluded under the law. In general, service is covered if performed for some portion of a day in the current or preceding calendar year. If two or more businesses or establishments are owned or operated by the same employer, they will be treated as a single employing entity for purposes of the law. See, however, the special rules that apply to household employee coverage below.

Tax Computation and Payment

The base amount (Taxable Wage Base) of each employee’s total earnings received as remuneration for covered employment during a calendar year is subject to contributions payable by the employer. The base amount is computed for each tax (calendar) year as an amount equal to 60.0% of the average annual wage in insured work in the Virgin Islands, rounded to the nearest $100.00.

Note: The 2006 Taxable Wage Base is $20,000.00.

Almost every form of remuneration paid to an employee is subject to contributions, including salaries, wages, commissions, tips, bonuses and the reasonable cash value of any meals or lodging provided.

A tax rate is assigned to each employer for each taxable year. Notice of the rate assigned is mailed by January 31st of each year.

Penalties are assessed on all delinquent wage and contribution reports, but not to exceed $60.00 per year. Interest is assessed on all delinquent contribution and reports at a rate of 9.0% per annum.

Non-Profit Organization and Governmental Entities

All employees of non-profit organizations and Virgin Islands governmental entities are covered under the Virgin Islands Unemployment Insurance Program. Both non-profit organizations and separate governmental entities may elect to finance their participation in the unemployment insurance program under the benefit reimbursement option rather than contribution (tax) method.

Charging of Benefit Payments

Benefits paid to a claimant are charged to the experience rating or reimbursement accounts of employers who paid wages to the individual during the base period of the claim. See "base period" under "Definitions" above. Employers are notified of these charges quarterly.

An employer should promptly contact the local office if:

  • He/she has work available for the claimant;
  • The claimant has declined an offer of employment or reemployment; or
  • He/she believes the claimant is currently working or otherwise not entitled to benefits.

An employer should also contact the Agency if he/she believes the benefits charged are incorrect for any reason.