Employers in 19 states may face higher 2012 FUTA rates

As you may recall from last year, state which are in default of their federal unemployment insurance (UI) loan for at least two years are not eligible to claim the maximum amount of state unemployment tax credits on their 2012 federal unemployment (FUTA) tax return. These means that you as the employer in these states pay a higher FUTA amount.

Possible credit reduction states for 2012.

The DOL list includes 19 states and the Virgin Islands as potential credit reduction states in 2012 if their federal UI loans are not repaid by November 10.

  • 0.9% credit reduction state. Employers in Indiana will be subject to a 0.9% credit reduction (maximum $63 per employee) if the federal UI loan isn’t repaid by November 10, because of Indiana’s failure to repay its outstanding federal UI loans for four consecutive years.
  • 0.6% credit reduction states. Employers in Arkansas, California, Connecticut, Florida, Georgia, Kentucky, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Rhode Island, and Wisconsin will be subject to a 0.6% credit reduction (maximum $42 per employee) if the federal UI loan isn’t repaid by November 10, because of their state’s failure to repay its outstanding federal UI loans for three consecutive years. Arkansas, California, Connecticut, Nevada, North Carolina, and Ohio have confirmed that they will be credit reduction states in 2012.
  • 0.3% credit reduction states. Employers in Arizona, Delaware, and Vermont would be subject to a 0.3% credit reduction (maximum $21 per employee) if the federal UI loan isn’t repaid by November 10, because of their state’s failure to repay its outstanding federal UI loans for two consecutive years. Arizona has confirmed that it will be a credit reduction state in 2012.

South Carolina currently has an outstanding federal UI loan, but it has submitted an initial application with the DOL certifying that it meets certain criteria required to avoid being a credit reduction state for federal UI purposes in the 2012 tax year.

We will let you know once a final list is published later this month.

 

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