Julie M. Whittaker
Specialist in Income Security
During some recessions, current taxes and reserve balances were insufficient to cover state expenditures for unemployment compensation (UC) benefits. UC benefits are an entitlement, and states are legally required to pay benefits even if the state account is insolvent. Some states may borrow funds from the Federal Unemployment Account (FUA) within the Unemployment Trust Fund (UTF) to meet UC benefit obligations. The 2009 stimulus package (the American Recovery and Reinvestment Act of 2009, P.L. 111-5 § 2004) temporarily waives interest payments and the accrual of interest on these loans to states from the FUA.
This report summarizes how insolvent states may borrow funds from the federal account within the UTF to meet their UC benefit obligations. Outstanding loans listed by state may be found at the Department of Labor’s website: http://www.workforcesecurity.doleta.gov/unemploy/ budget.asp#tfloans.
In 2010, three states had a credit reduction: Michigan (0.6), Indiana (0.3), and South Carolina (0.3). As a result, the credit reduction was applied retroactively to tax year 2010 earnings, and the net FUTA tax during 2010 for Michigan employers is 1.4% on the first $7,000 of each employee’s earnings. In Indiana and South Carolina (with a credit reduction of 0.3) the net FUTA tax during 2010 for Indiana and South Carolina employers was 1.1% on the first $7,000 of each employee’s earnings. In all other states the net FUTA 2010 tax was 0.8%.
Date of Report: February 8, 2011
Number of Pages: 13
Order Number: RS22954
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Specialist in Income Security
During some recessions, current taxes and reserve balances were insufficient to cover state expenditures for unemployment compensation (UC) benefits. UC benefits are an entitlement, and states are legally required to pay benefits even if the state account is insolvent. Some states may borrow funds from the Federal Unemployment Account (FUA) within the Unemployment Trust Fund (UTF) to meet UC benefit obligations. The 2009 stimulus package (the American Recovery and Reinvestment Act of 2009, P.L. 111-5 § 2004) temporarily waives interest payments and the accrual of interest on these loans to states from the FUA.
This report summarizes how insolvent states may borrow funds from the federal account within the UTF to meet their UC benefit obligations. Outstanding loans listed by state may be found at the Department of Labor’s website: http://www.workforcesecurity.doleta.gov/unemploy/ budget.asp#tfloans.
In 2010, three states had a credit reduction: Michigan (0.6), Indiana (0.3), and South Carolina (0.3). As a result, the credit reduction was applied retroactively to tax year 2010 earnings, and the net FUTA tax during 2010 for Michigan employers is 1.4% on the first $7,000 of each employee’s earnings. In Indiana and South Carolina (with a credit reduction of 0.3) the net FUTA tax during 2010 for Indiana and South Carolina employers was 1.1% on the first $7,000 of each employee’s earnings. In all other states the net FUTA 2010 tax was 0.8%.
Date of Report: February 8, 2011
Number of Pages: 13
Order Number: RS22954
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Posts
