MARCH 2007 EMPLOYER INFORMATION NOTICE

2007 TAX INFORMATION:

Rate for those who are New Employers in 2007: 3.1% Rate Range in 2007: 1.2% - 6.1%
Taxable Wage Base: $15,000

MINIMUM WAGE
Connecticut’s minimum wage is $7.65 per hour

NOW IT IS EVEN EASIER TO FILE QUARTERLY RETURNS ON THE INTERNET!

You now have two Internet options. You can use our Web application, CITWS, or you can
use commercially available desktop payroll software that produces both your
unemployment insurance tax return and wage report and your state withholding return in
one electronic file that is transmitted over the Internet.

OPTION 1: CONNECTICUT INTERNET TAX AND WAGE SYSTEM

Many enhancements have been made to the Agency’s Connecticut Internet Tax and Wage System
(CITWS) for the first quarter 2007 filing period; however, the most exciting new feature is the
automatic calculation of excess wages. Beginning in the first quarter 2007, our Internet system
will calculate excess wages for a majority of the employers reporting wages to Connecticut,
including employers who had not previously filed on the Internet. Employers will have the option to
use the figure calculated by the system, or complete the calculation themselves.

If you have used CITWS in the past, we believe you will find it easier to file quarterly returns and
pay unemployment compensation taxes than ever before. For employers who haven’t yet tried
Connecticut’s CITWS system, there is no better time to join more than 14,000 others who have
already discovered the ease of online filing with the Connecticut Department of Labor. Log on to
our Web site at https://wage.ctdol.state.ct.us.

OPTION 2: USE FSET TO FILE QUARTERLY UNEMPLOYMENT AND

WITHHOLDING TAXES ON THE WEB

There is now commercially available desktop payroll software from third party vendors that allows
employers to file and pay quarterly unemployment and state withholding taxes over the Web using
the Federal/State Employment Tax (FSET) format. The FSET file is produced by the payroll
software. Currently, four approved vendors offer this service. To see the list, log on to
http://www.ctdol.state.ct.us/uitax/FSET.htm.
March 2007 Employer Information Notice p. 2

EMPLOYERS PLEASE NOTE!

Last year our Field Audit staff completed more than 2,000 audits, and has compiled a list of the top six
most common errors found:

Employers misclassified individuals as independent contractors who are actually employees. If

you would like clarification in this regard, assistance is available on our Web site,
www.ctdol.state.ct.us/uitax/txmenu.htm. The heading is titled Self-Assessment of the
Employer-Employee Relationship for Connecticut Unemployment Taxes.

Limited Liability Companies (LLCs) reported and paid contributions to the Department of Labor
for the members of sole proprietorships filing IRS Schedule C and partners filing IRS Form
1065. LLCs should NOT report and pay contributions to the Department of Labor for the
members of sole proprietorships filing IRS Schedule C and partners filing IRS Form 1065.

Employers did not report payments for services to officers of a corporation. Payments for
services by officers of a corporation are taxable wages.

Employers did not report payments made into a Section 125 Cafeteria Plan. Payments made
into a Section 125 Cafeteria Plan are taxable wages.

Employers did not report all dismissal payments, including severance, unused sick pay, and
lump sum vacation pay. All dismissal payments, including severance, unused sick pay and
lump sum vacation pay are taxable wages.

Employers did not report tips made directly to an employee by a third party and accounted for
as taxable wages to the employer. Tips made directly to an employee by a third party and
accounted for to the employer are taxable wages for unemployment compensation reporting.

Note: Individuals who collected unemployment benefits in 2006 should have received a Form 1099G
that the Agency mailed at the end of January. Persons who have questions regarding the form may
contact the 1099 Infoline that will be in operation during the tax filing season. Assistance is available
by telephoning (860) 263-6099 Monday through Friday between 8 a.m. and 4 p.m.

YOUR LOCAL FIELD AUDIT UNEMPLOYMENT COMPENSATION OFFICE LISTED BELOW CAN PROVIDE ASSISTANCE IF
YOU HAVE QUESTIONS CONCERNING ANY UI TAX INFORMATION IN THIS NOTICE.
Bridgeport (203) 455-2725 Hartford (860) 256-3725 Norwich (860) 859-5700
Danbury (203) 797-4148 Middletown (860) 754-5130 Torrington (860) 626-6221
Enfield (860) 741-4285 New Britain (860) 827-7063 Waterbury (203) 437-3400
Hamden (203) 859-3325 New London (860) 439-7550 Willimantic (860) 423-2689

Thank you,
Jerry Fleming, U.C. Assistant Director of Accounts