Employers in 17 states may face higher 2013 FUTA rates

UIEmployers in 17 states (and the Virgin Islands) may not be eligible to claim the maximum amount of state unemployment tax credits on their 2013 federal unemployment (FUTA) tax return, because their state has had an outstanding federal unemployment insurance (UI) loan for at least two years.

The following states and the Virgin Islands will be credit reduction states in 2013, unless they repay their outstanding federal UI loans by Nov. 10, 2013, because, according to the Department of Labor, they have had an outstanding federal UI loan for at least two years: Arizona, Arkansas, California, Connecticut, Delaware, Georgia, Indiana, Kentucky, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Rhode Island, South Carolina, the Virgin Islands, and Wisconsin. A few states (e.g., Arkansas and Wisconsin) have already announced that they will be credit reduction states in 2013.

Employers in Arizona and Delaware face a possible 0.6% credit reduction on their 2013 FUTA tax return (maximum $42 increase per employee) because of their state’s failure to repay its outstanding federal loans for three consecutive years.

Employers in Arkansas, California, Connecticut, Georgia, Kentucky, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Rhode Island, the Virgin Islands, and Wisconsin face a possible 0.9% credit reduction on their 2013 FUTA tax return (maximum $63 increase per employee) because of their state’s failure to repay its outstanding federal loans for four consecutive years.

Employers in Indiana and South Carolina face a possible 1.2% credit reduction on their 2013 FUTA tax returns (maximum $84 increase per employee) because of their state’s failure to repay its outstanding federal loans for five consecutive years. However, South Carolina has made a $144 million early payment toward its outstanding federal UI insurance loan and plans to make an additional $50 million payment in September. South Carolina took steps to avoid becoming a FUTA tax credit reduction state in 2012 and expects to continue to avoid such a reduction in 2013 as it continues to repay its loan.

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