Copyright Notice.

Each module of the course manual may be viewed online, saved to disk, or printed (each is composed of 10 to 20 printed pages of text) by students enrolled in the authors accounting course for use in that course. Otherwise, no part of the Course Manual or its modules may be reproduced or copied in any form or by any meansgraphic, electronic, or mechanical, including photocopying, taping, or information storage and retrieval systemswithout the written permission of the author. Requests for permission to use or reproduce these materials should be mailed to the author.

Introduction to Payroll Administration Module 6 Unemployment Taxes

Text Reading Assignment: Chapter 5 (beginning to end). I. Unemployment taxes are collected by state governments and used to provide support payments to workers who become unemployed. This gives unemployed workers a source of income while they seek new jobs. The Social Security Act (1935) required all the states to establish unemployment programs A. FUTA. To fund the administration of these state programs, Congress enacted the Federal Unemployment Tax Act (FUTA) which requires that employers (not employees) pay a tax to the federal government to pay for the administration (but not the payment of benefits) of the federal and state unemployment programs.

The IRS has produced a series of video lessons for employers that relate to income tax withholdings laws. One of these lessons discusses the FUTA program and FUTA withholdings requirements. Launch the video by clicking the link below.

http://my-accounting-tutor.com/Payroll/Videos/FUTA.wmv B. SUTA. The payment of benefits is handled by each state, and is made from the trust fund established by the state and funded through its respective State Unemployment Tax Act (SUTA). Each state creates its own state tax act and unemployment program and the rules and regulations vary from state to state, but the states must conform to federal standards. This results in state programs that are generally similar, though their individual features differ greatly. In some states employees pay a portion of the state tax, in others (Illinois is one) only the employer pays the tax. Workers Eligibility. In order to receive unemployment benefits, certain criteria must be satisfied. 1. In Illinois, the worker must have earned at least $1,600 in wages during a 12-month base period. The base period is defined as the first four of the five completed calendar quarters preceding the worker's initial claim for benefits.

C.

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2.

At least $440 of the $1,600 must have been earned during quarters other than the one in which earnings were highest.

Example: Bill Bit is laid off on November 1, 20X8 (during the fourth quarter of the year) and files for unemployment benefits. During the previous 5 calendar quarters, Bill earned the following amounts: Calendar Quarter July 1 September 30, 20X8 April 1 June 30, 20X8 January 1 March 31, 20X8 October 1 December 31, 20X7 July 1 September 30, 20X7 Total Quarterly Earnings $900 $800 $700 $600 $500 $3,500 Base Period Earnings --$800 $700 $600 $500 $2,600

Conclusion: Bill has earned $2,600 during the 12-month base period, well above the $1,600 required. The April 1 June 30 quarter has the highest earnings ($800), and $1,800 (well above the $440 required) was earned in the other base period quarters. Bill qualifies for unemployment benefits.

D.

Additional Information. 1. An eligible claimant can receive up to 26 weeks of regular benefits during the year after he or she first files a claim. During periods of high unemployment, additional weeks of extended benefits may be authorized. 2. The amount of weekly benefits paid depends on the amount of wages earned during the base period -- specifically, on average weekly earnings during the two quarters in which earnings were highest. The Act sets minimum and maximum weekly benefit amounts; within those limits, a claimant's weekly benefit amount will be roughly half his or her former wages. 3. The weekly benefit payment may be increased by a dependent's allowance. It may be decreased if the claimant receives income from other sources. 4. Benefits may be denied to employees who have voluntarily quit a job without good cause attributable to the employer, been discharged for misconduct connected with the job, or who have ceased work due to involvement or participation in a labor dispute. 5. Benefits may be discontinued because of physical inability to work, failure to adequately search for work, unavailability for work (including refusal of a suitable job offer or refusal of a former employer's recall).

II.

FUTA Tax Rates, Earnings Limitations and Calculations. A. The FUTA tax rate is 6.2% of the first $7,000 paid each employee during the calendar year. It is only the cash wages paid during the year that count in the determination of earnings, and not accrued wages.

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B.

Employers are given a credit against the federal rate for participation in state programs. The amount of the credit is 5.4% of the first $7,000 in wages paid, resulting in a net effective FUTA tax rate of .8% (6.2%-5.4%). 1. To receive the full credit, employers must make the required state contributions on or before the due date for filing the annual FUTA return (form 940), which is January 31 of the following calendar year. 2. If an employer has not made the state payments in full by February 2 of the following calendar year, the credit is reduced by 10% of the portion of the state tax that was late. Example: Adams Company had annual taxable wages paid of $100,000 and pays SUTA taxes at a rate of 5.4% for total SUTA taxes of $5,400. The FUTA tax before the state credit is $6,200 ($100,000 x 6.2%). The amount of the state tax credit is $5,400 ($100,000 x 5.4%), and the net tax due is $800 ($6,200 - $5400). Had Adams paid $400 of its state tax liability after the due date of From 940, a 10% penalty would have been imposed, and $40 ($400 x 10%) of the state tax credit would have been lost. The FUTA tax would now be $840 ($6,200 - $5,360). 3. Experience ratings (or merit ratings) are given by the state to employers who have good employment records, and they have the effect of reducing the state tax rate levied upon the employer. Despite the fact that the employer may pay more or less than 5.4% to the state, the FUTA state tax credit is kept at a full 5.4% for all employers who make timely payment to the state. a. If the employers state rate is less than 5.4%, penalties imposed for late payment are based only upon the cash amount paid late, irregardless of the actual state rate imposed. Example: Adams Company had annual taxable wages paid of $100,000 and pays SUTA taxes at a rate of 3%. for total SUTA taxes of $3,000. The FUTA tax before the state credit is $6,200 ($100,000 x 6.2%). The amount of the state tax credit is still $5,400 ($100,000 x 5.4%), and the net tax due is $800 ($6,200 - $5400). Had Adams again paid $400 of its state tax liability after February 2, a 10% penalty would have been imposed, and $40 ($400 x 10%) of the state tax credit would have been lost. The FUTA tax would now be $840 ($6,200 - $5,360). Now suppose that Adams Company had annual taxable wages paid of $100,000 and pays SUTA taxes at a rate of 7%. for total SUTA taxes of $7,000. The FUTA tax before the state credit is $6,200 ($100,000 x 6.2%). The amount of the state tax credit is again kept at $5,400 ($100,000 x 5.4%), and the net tax due is $800 ($6,200 - $5400). Had Adams again paid $400 of its state tax liability after February 2, a 10% penalty would have been imposed, and $40 ($400 x 10%) of the state tax credit would have been lost. The FUTA tax would again be $840 ($6,200 - $5,360).

b.

When the states wage base is higher than the $7,000 set for FUTA taxes, the amount of state taxes paid at 5.4% can be greater than the 5.4% credit allowed for FUTA taxes.

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Example: For FUTA purposes ($7,000 wage base), Adams Company had annual taxable wages of $100,000. The state in which the company pays SUTA taxes has set a wage base of $9,000, which results in $130,000 of taxable wages for SUTA purposes. Adams pays SUTA taxes at a rate of 5.4%. for total SUTA taxes of $7,020 (5.4% x $130,000). The FUTA state credit is still $5,400 ($100,000 x 5.4%). c. Employers of workers who earn wages in more than one state must pay unemployment taxes in each state where the work is performed, on the wages earned in that state. Despite payment to multiple states, the state credit for FUTA taxes is still 5.4% of the first $7,000 in total wages paid to the employee.

D.

Title XII advances may reduce the state tax credit for FUTA taxes. These advances represent loans from the federal government to states that are unable to pay their unemployment benefits. The reduction in the state tax credit begins in the second calendar year after the advance is made, but only if it has not been repaid, and it amounts to .3%. If the balance is still outstanding in the third year, another .3% reduction is applied (total reduction = .6%). These .3% annual reductions may continue, but they are limited to a total of no more than .6% as long as the state meets the solvency standards set by the Department of Labor. Example: For FUTA purposes ($7,000 wage base), Adams Company had annual taxable wages of $100,000. The state in which Adams pays SUTA taxes has taken Title XII advances and kept them outstanding for three years, but has met the DOLs solvency standards. Adams state tax credit is 4.8% (5.4%-.6%) of the first $7,000 in wages paid its employees.

Note from the Instructor: Highland Community College is located in Illinois, so the information that follows is specific to Illinois. The text that accompanies these module outlines was written for a national market, and does not provide this information. For additional information, forms, etc., see the Illinois Department of Employment Securitys website at http://www.ides.state.il.us/employer/uitax.asp.

III.

SUTA Tax Rates, Earnings Limitations and Calculations. A. Beginning in 2010 in Illinois, the state unemployment tax paid by an employer is a varying percentage rate multiplied by the first $12,520 of wages paid an employee during the calendar year. Earnings above this $12,520 earnings base are not taxed. The earnings base changes from year to year. In 2010 it was raised from the $12,300 limit that was effective in 2009.

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B.

The percentage rate used by the employer in Illinois can vary between a maximum rate and a minimum rate. For 2010, the maximum rate is 7.25% and the minimum rate is .65%. These rates increased from the 6.8% maximum and .6% minimum rates that were in effect in 2009. Changes in rates are common, and they can sometimes vary by quite a lot. In 2005, for example, there was a 9.8% maximum and a 1.2% minimum rate! 1. The maximum rate and the minimum rate are each determined by applying a rather complicated formula to the current year's factor values (see below): The state experience factor value is determined by the state each year, and it is set at a level that ensures the solvency of the fund while avoiding excessive surpluses. It is announced each year, usually in October, for the following year. To determine the maximum and minimum SUTA rates, the current year's state experience factor value is multiplied by a base rate (6.4% and .2% for the maximum and minimum rates, respectively). The result is rounded to the nearest tenth of a percent. The maximum rate must be at least 6.4% or higher, and the minimum rate cannot be less than .2%. The minimum and maximum rates are then adjusted by adding on a special fund building premium (applied to build up reserves in the trust fund). For 2010, the state experience factor value is 107%, and the fund building premium amount is .45% (45 hundredths of a percent, or .0045 in decimal). Therefore, the maximum rate is EITHER equal to 6.4% multiplied by the adjusted state experience factor OR 6.4%, whichever is higher -plus the .45% fund building premium. The minimum rate is equal to EITHER .2% multiplied by the adjusted state experience factor OR .2%, whichever is higher -plus the .45% fund building premium. To illustrate:

2.

3.

Maximum = (6.4% x 1.07) + .45% = 6.8% + .45% = 7.25% Minimum = (.2% x 1.07) + .45% = .2% + .45% = .65% Example: Assume, for a given year, that the state experience factor is 107% and the fund building premium is 0.7%. If so, the minimum contribution rate for the year is 0.9% (0.2% x 1.07 plus the 0.7% Fund Building Premium = .914%, which rounds to .9%) and the maximum contribution rate is a rounded 7.5% (6.4% x 1.07 plus the 0.7% Fund Building Premium). In 2006, the adjusted state experience factor was 127%. Therefore, the maximum contribution rate for 2006 was 8.9% [(6.4% x 1.27) + .8%], and the minimum rate was 1.1% [(.2% x 1.27) + .8%]. Caution: these calculations are subject to legislative change. In 1996, for example, when the fund building premium was .4%, the unadjusted minimum was set by statute at .1% without regard for the state experience rating, so the minimum rate became .5% (.1% + .4%). C. Small business exception: employers whose total taxable wages for a quarter are less than $50,000 are taxed at rate that cannot exceed a maximum amount of 5.4%.

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D.

Initial starting rates: New employers (those becoming liable for the unemployment taxes within the prior two years) who have no experience rating with the state are given an introductory starting rate. For 2006, employers who became liable for the payment of contributions on or after January 1, 2004 paid an introductory rate of 4.2%. This rate included the 0.7% fund building premium. For 2010, employers who became liable for unemployment taxes on or after January 1, 2008, pay an introductory rate of 3.35%. The table below summarizes the factor values for several years. Note how the rates varied from year to year as the factor values changed.
Illinois Department of Employment Security Revenue Division

YEAR STATE EXPERIENCE FACTOR BENEFIT CONVERSION FACTOR STARTING RATE MINIMUM RATES MAXIMUM RATES FUND BUILDING SMALL EMPLOYER RATE WAGE BASE

2004 123% 138.4% 4.00% 0.90% 8.60% 0.70% 5.40% $9,800

2005 139% 138.4% 4.70% 1.20% 9.80% 0.90% 5.40% $10,500

2006 127% 138.4% 4.20% 1.10% 8.90% 0.80% 5.40% $11,000

2007 115% 138.4% 3.90% 1.00% 8.20% 0.80% 5.40% $11,500

2008 103% 138.4% 3.40% 0.80% 7.20% 0.60% 5.40% $12,000

2009 91% 138.4% 3.10% 0.60% 6.80% 0.40% 5.40% $12,300

2010 107% 138.4% 3.35% 0.65% 7.25% 0.45% 5.40% $12,520

E.

Subsequent rates. Employers are initially given a fixed starting SUTA rate, but after three consecutive years of incurring unemployment tax liability they become experiencerated employers and the SUTA rate becomes variable. An experience-rated employer qualifies for a variable rate based on the "experience" the state has had with the employer. The term "experience" here refers to the number of the employer's former workers who drew unemployment benefits and the amounts paid to them. 1. For experience-rated employers (those with three or more years of experience), the SUTA tax rate is based on the benefit ratio. This ratio is determined in such a way that the greater the amount of unemployment benefit payments caused by the employer, the higher the rate. There are three components of the Benefit Ratio: Benefit Charges - The amount of unemployment benefits paid to former employees during the benefit charge periods listed below (the period to use depends on the number of years the employer has been paying unemployment taxes). These benefit charges are listed on the BEN-118 Statement of Benefit Charges received from the state of Illinois. Benefit Conversion Factor (BCF) - The BCF is computed by the state each year and announced early in the year, usually January. The BCF has remained constant for several years at 138.4%. Taxable Wages -- These are the wages recorded by the employer for the benefit charge period as reported on the UI-3/40 Quarterly Contribution and Wage Reports. 2. To illustrate the calculation of the Benefit Ratio, assume that it is 2010 and you have been in business, with employees, for some time now. a. If you have incurred liability within each of the three calendar years immediately preceding 2010, calculate your Benefit Ratio as follows:

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2.

3.

Total the Benefit Charges for the period July, 2008 though June, 2009. Multiply the total Benefit Charges by the Benefit Conversion Factor of 138.4%. Divide these Converted Benefit Charges by the employers Taxable Wages for the period July, 2008 through June 2009. This result, rounded to four places past the decimal and expressed as a percentage, is your Benefit Ratio. b. If you have incurred liability within each of the four calendar years immediately preceding 2010, calculate your Benefit ratio as follows: Total the Benefit Charges for the period July, 2007 through June, 2009. Multiply the total Benefit Charges by the benefit Conversion Factor of 138.4%. Divide these Converted Benefit Charges by your Taxable Wages for the period July, 2007 through June, 2009. This result, rounded to four places past the decimal and expressed as a percentage, is your Benefit Ratio. c. If you have incurred liability within each of the five calendar years immediately preceding 2010 calculate your Benefit Ratio as follows: Total the Benefit Charges for the period July, 2006 through June 2009. Multiply the total Benefit Charges by the Benefit Conversion Factor of 138.4% Divide these Converted Benefit Charges by your Taxable Wages for the period July, 2006 through June, 9 This result, rounded to four places past the decimal and expressed as a percentage, is your Benefit Ratio. d. Once 5 years of "experience" are reached, additional years are not considered. Therefore, employers who lay off workers in a given year will see their benefit ratios (and SUTA tax rates) increase in the following year. This effect will continue for four more years, and the employer's benefit ratio (and SUTA taxes) will not return to normal levels until the 5 years pass. Once the benefit ratio is determined, it is multiplied by the state experience factor (127% in 2010) and rounded to the nearest one tenth of one percent. The state experience factor is calculated by the state each year and is set in order to ensure the solvency of the fund while avoiding excessive surpluses. It is announced each year, usually in October, for the following year. To finally determine the employer's SUTA tax rate, add the fund building premium of .45% (for 2010) to the number calculated in step 2 above. This is the employers contribution rate. It must fall within the minimum contribution rate (.65% in 2010) and the maximum contribution rate (7.25% in 2010). NOTE: Remember that a small employer whose calculated contribution rate is 5.5% or

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higher and whose total quarterly wages are less than $50,000, pays contributions at 5.4% in that quarter. Examples of Rate Calculation (based upon 2004s 123% experience factor and the 2004 8.6% maximum and .9% minimum SUTA tax rates). 1. An employer's Benefit Ratio of 0.0722% is multiplied by the 2004 State Experience Factor of 123% to get 0.0888% which rounds to 0.1%. Although adding the Fund Building Rate of 0.7% equals 0.8%, the employer's 2004 contribution rate is the minimum rate of 0.9%. 2. An employer's Benefit Ratio of 1.5299% is multiplied by the 2004 State Experience Factor of 123% to get 1.8818% which rounds to 1.9%. After adding the Fund Building Rate of 0.7%, the employer's 2004 contribution rate is determined to be 2.6%. 3. An employer's Benefit Ratio of 8.0612% is multiplied by the 2004 State Experience Factor of 123% to get 9.9153% which rounds to 9.9%. Although adding the Fund Building Rate of 0.7% equals 10.6%, the employer's 2004 contribution rate is the maximum rate of 8.6%. NOTE: See the Supplement at the end of this module for a comprehensive illustration of the determination of SUTA tax rates and the effect of benefit charges upon the SUTA tax liability.

F.

SUTA Dumping. In 2006 the state of Illinois implemented federal requirements that forced the individual states to crack down on employers who illegally lower their unemployment insurance taxes by setting up dummy business entities. The law imposes federally mandated penalties for "SUTA dumping." This occurs when a company with high unemployment insurance contribution rates deliberately creates a new business entity and dumps its employees into it, thereby qualifying for a new starting SUTA tax rate and fraudulently reducing its SUTA taxes. The practice forces other, law-abiding employers to make up the difference through an increase in the State Experience Factor. Companies violating the law are guilty of a Class B misdemeanor and its officers could face jail time of up to 60 days, and the company can have a 50 percent penalty surcharge applied to its annual contribution rate for up to four years. In addition, the company, and any individual who consulted the company to engage in a SUTA dumping practice, could be fined up to $10,000 in civil penalties. How Benefit Charges are Determined, Rights of Employers 1. IDES lists each benefit payment in the account records of a "chargeable employer." These "benefit charges" ultimately affect the employer's tax rate. The chargeable employer is the employer who a. laid the claimant off or reduced his hours; and was the last one to employ the claimant before he filed his claim (for a period of at least 30 working days), or who b. provided employment that allowed the claimant to requalify for benefits after he was disqualified for certain reasons.

G.

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2.

Employers have the right to protest former employee's claims and to appeal any adverse decision.

IV.

Who must pay unemployment tax? Employers of "one or more in twenty weeks" or employers with $1,500 or more of quarterly payroll must pay federal and state unemployment tax. An employing unit, except certain types of nonprofit organizations or local governmental entities, that has one or more persons in employment in Illinois on any one day within each of 20 or more calendar weeks in any calendar year is required to pay contributions for that calendar year and for at least the following calendar year, even though it did not or does not have one or more employees in as many as 20 weeks in that second year. An employing unit that does not meet the "one or more" test but pays or paid wages for services in employment of $1,500 or more during any calendar quarter of a calendar year ($1,000 in the case of domestic service work) is required to pay contributions for the remainder of that calendar year and for at least the following calendar year. It must also pay contributions quarterly thereafter. In the case of farm work, the employer must have paid $20,000 in cash wages in one calendar quarter, or employed 10 or more workers in each of 20 weeks in a given calendar year. EXAMPLE: Even if the twentieth week in which one or more persons were employed falls in the last part of December of a particular year, or $1,500 in wages are paid for the first time in the fourth quarter of the year, the employing unit is liable for contributions on its taxable payroll for that year and also for the following year. It must file its first report in January of the second year and pay contributions based on its first years taxable payroll, and it must file reports for each quarter in which it had paid employees. A. Once having had one or more persons in employment on any one day within each of 20 or more calendar weeks in any calendar year, or once having paid $1,500 or more in wages in any calendar quarter for services in employment, an employing unit will have to pay contributions for that year and for every year thereafter unless it has a year with less than "twenty weeks of one;" AND all the quarterly taxable payrolls in that year are less than $1,500; AND it asks the Director of Employment Security (in writing) to be relieved from the requirement of paying contributions; AND such request is granted. 1. There is a time limit for filing such a request. For the termination of coverage to be effective as of January of any calendar year, the request must be filed prior to February 1 of that year. 2. However, an employer that no longer has services being performed for it in Illinois can request termination immediately if it files an application with the Director within 5 days of the date that its next wage report is due. However, if the employer again has individuals providing services to it during that calendar year or the following calendar year, the termination shall be rescinded as of the date that the termination was originally granted. B. For an employing unit to have in employment one or more individuals within each of 20 or more calendar weeks does not mean that an employing unit must necessarily have a staff of one or more regular, full-time workers for 20 weeks in a row, or that the same individual is employed in

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each such week. A part-time worker, who works for only a half hour one day a week, counts just as much in each week as one regular, full-time worker. Example: If the employing unit hired a different part-time worker each week for 20 calendar weeks, it would have to pay contributions for that year and for at least the next calendar year. C. The week to be used in determining liability is a calendar week, which may not necessarily be the employer's payroll week. An employer's payroll week could end on any day of the week, but a calendar week begins at 12:01 A.M. on Sunday and ends at midnight on the following Saturday. If a worker works a few hours on Saturday and a few hours on Sunday in the same weekend, he is working in two different calendar weeks. D. All individuals performing services for an employing unit are counted in determining the number of workers or in determining the quarterly taxable wages except for the following. Compensation payments to these persons are specifically exempted from SUTA taxes. 1. The owner or owners (partners) of an employing unit (Section 206). Officers of a corporation, even if they are the sole stockholders, are not considered the owners of the business of a corporation. They usually are considered to be in employment and must be counted. 2. Directors of a corporation acting in the capacity of a Director or on a committee provided for by law or by the charter or the by-laws of the corporation. The services on the committee must be as a Director dealing with broad matters of policy, and not those ordinarily performed by an officer or other employee of a corporation (Section 232). This Section does not apply to certain nonprofit organizations. 3. The owner's father, mother, spouse, and the owner's child under the age of 18. However, a person working for a corporation is counted even though the owner of all the stock is the worker's son, daughter, spouse or parent. (Section 218) 4. Persons who do not perform any of their services in the State of Illinois. However, after 1971, if such person is not covered by any other state or Canada, his services are considered to be Illinois employment if the place from which the services are directed or controlled is in Illinois. 5. Persons free from the employer's control and direction who are engaged in an independent trade, occupation, business or profession. If they perform services which are outside the course of the employer's business or performed outside the place of business (Section 212). This provision is much more narrowly defined than what is commonly known as an "independent contractor." See 56 Ill. Adm. Code 2732.200 for the factors considered in the application of this exception. 6. Agricultural and aquacultural workers. Only certain specified types of these workers are counted in employment. The worker should be counted if the employing unit paid cash wages of $20,000 or more in any calendar quarter either in the current or preceding year to workers employed in agricultural or aquacultural labor, OR the employing unit employed 10 or more such workers in each of 20 or more weeks in either the current or preceding year (Sections 214 and 211.4). 7. Domestic workers in private homes, local college clubs and local chapters of college fraternities or sororities.

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Unless the employer had paid cash wages of $1,000 or more in any calendar quarter in either the current or preceding calendar year to an individual or individuals employed in such domestic service (Sections 215 and 211.5). 8. Officers or members of the crew of a vessel that is not an American vessel or that is directed or maintained from an operating office outside this State. This includes persons whose services are performed outside this State. This also includes persons whose services are performed on or in connection with an aircraft, which is not an American aircraft, if the person is employed on or in connection with such aircraft when outside the United States (Section 216). 9. Real estate salesmen Under certain conditions (Section 217). 10. Persons under the age of 18 who deliver newspapers or shopping news and any persons who deliver newspapers or shopping news to the ultimate consumer. If substantially all of their remuneration is on a "per piece" or output rather than an hourly basis and they work under written contracts that indicate they are not to be treated as employees for federal tax purposes. Freelance editorial and photographic work for newspapers is also exempt (Section 225). 11. Insurance agents who are paid solely by commission (Section 228). 12. Persons who perform services in another state as well as in Illinois. But only if the Director of Employment Security has agreed to consider all of their services performed in another state (Section 2700). 13. Certain persons performing services for nonprofit organizations. (See the section on nonprofit organizations for a complete explanation.) 14. Certain persons who perform services for governmental entities. (See the section on governmental entities for a complete explanation.) 15. Direct sellers of consumer goods outside of a retail establishment. But only if the remuneration for such service is directly related to sales, rather than hours worked, and the services are performed pursuant to a written contract that provides that the person shall not be treated as an employee for federal tax purposes (Section 217). 16. Owner-operators of their own trucks. But only under certain specified circumstances as provided in the Act (Section 212.1 and 56 Ill. Adm. Code 2732.205). 17. Real estate closing agents. When their contracts with the title insurance company specify that they are not employees and that they are paid on a per closing basis (Section 217.1). 18. Real estate appraisers. If their written employment contracts provide that they are paid on a fee per appraisal basis and that they are free to accept or reject appraisal requests from that entity or other entities (Section 217.2). 19. Golf caddies. If they are full-time students under the age of 22 and are paid directly by a golf club member or by the golf club on behalf of a member (Section 232.1).

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V.

Reporting Forms and Filing Requirements A. Federal Form 940. Form 940 (or 940EZ) is used to report the employers annual federal unemployment tax liability. 1. Form 940EZ may only be used if the employer (a) paid state unemployment taxes in just one state, (b) has made the state unemployment tax payments by the due date of Form 940EZ (January 31), and (c) paid wages that are taxable for both state and federal unemployment. 2. The due date for Form 940 is January 31 of the following calendar year. If timely deposits have been made and the total liability has been paid in full through them, then the due date is extended to February 10. 3. Postmark dates determine the date filed. 4. See chapter 5 of the text for examples. Quarterly deposits of FUTA taxes are required if the accumulated FUTA liability exceeds $500. When this happens, the deposit must be made by the end of the month following the end of the quarter. If any deposit due date falls on a Saturday, Sunday, or legal holiday, the deposit is due on the next business day. 1. Quarterly deposits must be made at the bank with an accompanying Form 8109 coupon marked 940 and with the proper quarter marked. 2. If, at the end of the year, the total accumulated liability is less than $500, the fourth quarters payment may be mailed with Form 940 instead of being deposited at the bank. Example: Davidson Companys FUTA tax liability is $150 for the first quarter, $195 for the second quarter, $230 for the third quarter, and $240 for the fourth quarter. Davidson must make a quarterly deposit of $575 by October 31. In addition, since Davidsons liability is only $240 at the end of the fourth quarter, the $240 deposit may be made with its annual Form 940 filing. Had the accumulated liability been more than $500, the deposit would have had to have been made at the bank with a Form 8109. C. SUTA Filings, Deposits and Record Keeping Requirements. 1. Illinois requires new employers whom have not paid contributions or has not filed a report of its employment experience to complete and file Form UI-1 (Report to Determine Liability) from the Revenue Division of the Department of Employment Security. This report must be completed and filed with the Revenue Division. A newly created employing unit must file this report within thirty days after it begins business. 2. Any employing unit, including those not liable for the payment of contributions, which goes out of business, or transfers or sells substantially all of its business assets or its business, or is involved in any change must submit Form UI-50A (Notice of Change) to the Department of Employment Security within ten days of such change. This report also must be filed if a business sells a separate part of its business or the assets of such separate part. 3. All employers determined to be liable for the payment of contributions must file Form UI-3/40 (Contribution and Wage Report) quarterly. Similar forms must be filed by nonprofit organizations and local governmental entities that elect to reimburse benefits in lieu of paying contributions. The wages of the workers for a calendar quarter are

B.

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reported on Form UI-3/40. Before mailing the UI-3/40 to the employer, the Department of Employment Security imprints on it the employer's name, address, account number and the rate at which contributions are to be computed. The UI-3/40 should be completed and promptly returned with a check or money order covering the contributions due. The check should be made payable to The Director of Employment Security and mailed with the Report and Transmittal to the designated address. These forms should be mailed using the envelope provided. a. An employer who has been paying contributions but who has paid no wages in a calendar quarter because of temporary inactivity must file a quarterly report showing "no wages paid." If the employer terminates business, he should file a final report showing the wages paid in the last quarter of business and should also file a Form UI-50A. (56 Ill. Adm. Code 2760.110) b. Effective with reports due for the first quarter of 1994, the UI-3/40 must be filed by the use of electronic media which has been approved by the Director if the employer reasonably expects to have 250 or more workers in its employ during that year or had 250 or more workers in its employ during the previous year. Failure to comply with this requirement will result in penalties to the employer. Waiver of this requirement is allowed only where the employer has been granted a waiver of the similar federal electronic reporting requirement. c. An employer whose payroll records are maintained on data processing equipment, and who is not subject to the requirement explained in the previous paragraph, may submit its individual workers' wages on electronic media. Information and detailed instructions for reporting on tape may be obtained by writing to: Department of Employment Security , Attn: Document Control, 401 S. State Street, Chicago, IL 60605 D. Employer Records. All individuals or firms that employ one or more workers must maintain and preserve payroll records that show (56 III. Adm. Code 2760.115): 1. Each worker's name (including temporary and part-time workers). 2. Each worker's social security account number. 3. The city or county in which each worker is employed. 4. The dates upon which each worker performed services. 5. The date on which each worker was hired, the date on which each worker was laid off, discharged or quit, and the date of rehiring after temporary layoffs. 6. The monthly, weekly, daily or hourly rate of pay, or the piecework rate if the worker is paid on a piecework basis. 7. The number of hours worked by each worker paid at an hourly or piecework rate. 8. The customary or scheduled fulltime hours for each worker paid on an hourly or piecework basis in the employment in which he is engaged. 9. The dates covered by the employer's pay period, the wages paid each worker for each pay period and the total wages for each pay period. 10. The record of wages paid must include: a. Money wages paid, such as wages, salary and commissions. b. Reasonable cash value of remuneration other than cash such as board, room, laundry, etc., except where a meal is provided for the benefit of the employer. (56 Ill. Adm. Code 2730.100)

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Payroll Accounting Course Manual, Module 6

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11. 12.

Special payments, such as bonuses, gifts, prizes, dismissal pay, vacation pay or pay in the nature of vacation pay, wages in lieu of notice, and the period of time these special payments cover. d. The amount of tips and gratuities, where these are customarily received by workers from persons other than the employer and are reported to the employer by the worker. All payroll records must be kept in such a way that quarterly wages of each worker and the weeks in which the workers performed their services may be easily determined. The records of employing units must be preserved for at least five years, or until a determination and assessment of contributions, interest, or penalties is made or an action for the collection of contributions, interest or penalties has become final or is canceled and withdrawn. (Section 1801)

E.

Notice Of Claim 1. As soon as possible after a claim is filed for benefits, a Notice of Claim to Last Employing Unit and Last Employer or Other Interested Party is sent to the claimant's last employing unit, the employer whose experience rating will be chargeable if benefits are paid to the individual and to any other individual or organization for which the individual provided services subsequent to the beginning of his benefit year. The same notice is sent when an additional claim or a claim for Extended Benefits is first filed. 2. An employer which receives the above Notice and which believes that the claimant may be ineligible for benefits for any reason, must AT THAT TIME file a letter or a Notice of Possible Ineligibility (Form UI(ILL) BIS-32)(return copy) if it wishes to be a party to the claims adjudicator's determination. a. Unless the employer is a party to a determination, it would not have the right to appeal an adverse determination. This Notice must be mailed to the local office designated on the form, and by the designated "REPLY DUE DATE " (within TEN days from the NOTICE OF CLAIM). As mentioned above, if the Notice is not sent on time, the employer loses its appeal rights except with regard to the issues of availability, disqualifying income, refusal of work or "not unemployed" for subsequent weeks. (Section 702 and 56 Ill. Adm. Code 2720.130) b. If an employing unit discharges an individual for an alleged felony or theft connected with his work, the employing unit must, within 10 days of the date that the individual files his next claim for benefits, notify the following office: Illinois Dept. of Employment Security Attn: Labor Dispute Unit 401 S. State St., 7 South Chicago, IL 60605

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Payroll Accounting Course Manual, Module 6

15

VII.

Notifying Workers of Their Rights Under SUTA A. Illinois employers are required to inform workers about their rights to unemployment insurance benefits. 1. Posters are available by download from the IDES website or by contacting IDES at 800247-4984 or 312-793-4880. The following posters are mandatory: 2. Notice to Workers About Unemployment Insurance Benefits (IDES) Equal Employment Opportunity is the Law Your Rights Under the Family and Medical Leave Act Job Safety and Health Protection Notice: Employee Polygraph Protection Act Fair Labor Standards Act - Federal Minimum Wage Notice to Workers with Disabilities Migrant and Seasonal Agricultural Worker Protection Act (MSPA) Notice to Employers and Employees Worker's Compensation: Notice to Employees from the State of Illinois

When a workers employment is terminated, the employer must give the worker a copy of the brochure titled What Every Worker Should Know about Unemployment Insurance (Form BEN-39). If it cannot be hand-delivered, it must be mailed to the worker's last known address within five days of separation. The IDES provides the brochures at no charge.

VIII. Certification A. Congratulations upon your completion of our course! As you studied these modules, you were given a comprehensive overview of the rules and regulations that govern the careers of payroll professionals in America. Before we leave our course, you should be aware of the requirements and the opportunities regarding certification in payroll. There are two kinds of certification that you should know about: 1. The Internal Revenue Service (IRS) is moving toward regulation of the tax preparation industry. Previously, anyone who "hung out a shingle" could prepare income tax returns for clients and charge a fee for doing so. Beginning in tax year 2011, all tax preparers who receive a fee for completing a federal tax return will be required to obtain a preparer tax identification number (PTIN) and become certified. Enrolled Agents 1 , Certified Public Accountants and lawyers are exempt from this rule, but anyone else will now have to pass a certification examination in order to prepare tax returns for clients. a. Will the income tax certification requirement, then, apply to individuals who only prepare payroll or other non-income tax returns? Yes. Individuals who are compensated for preparing, or assisting in the preparation of, all or substantially
Enrolled Agents are licensed to practice by the federal government and, like CPA's and attorneys, may represent taxpayers before the IRS. The license is earned in one of two ways: (1) by passing a comprehensive examination over all aspects of the tax code, or (2) by working with the IRS for 5 years in a position in which tax regulations were interpreted and applied.
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1

Payroll Accounting Course Manual, Module 6

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b.

c.

d.

all of a federal tax return must obtain a PTIN, and Forms 941 and 940 are federal tax returns! Therefore, all independent paid tax return preparers, whether they prepare income tax returns or payroll tax returns, will be required to obtain a preparer tax identification number (PTIN). If the preparer is not an attorney, certified public accountant, or enrolled agent, the preparer will need to take the competency test and satisfy the continuing education requirements. What about employees? Will a bookkeeper employed by a business have to take the exam if they only do their employer's 941 and 940? No. An employee who prepares his or her employers returns is not required to sign as a paid preparer. Accordingly, unless the employee prepares other federal tax returns for compensation, he or she will not be required to register and obtain a PTIN. To summarize, employees who administer the payroll function and prepare Form 941 will not be required to be certified. Payroll professionals, who handle payrolls for their clients independently, will have to have a PTIN. Unless they are attorneys, certified public accountants, or enrolled agents, they will need to take the competency test and become certified.

2.

Another form of certification should also be of interest to you. The American Payroll Association (APA) is a national not-for-profit organization of payroll professionals. The APA administers two certification programs in payroll. APA certification is a valuable, objective credential that verifies a specified level of knowledge, skills, and abilities in the payroll profession. a. Certification helps individuals demonstrate their payroll expertise, secure promotions, advance their careers, and enhance their standing within the profession. As you completed our course, you studied the same material that is covered on the APA certification examinations, and I am confident that with a little investment of time and effort you will be able to pass the examination and become certified. I encourage you to consider doing this! b. APA offers two levels of certification, the Fundamental Payroll Certification (FPC) and the Certified Payroll Professional (CPP) certification. Persons who pass the national examination may list the FPC or CPP designations following their names and on their resumes, similar to the way CPAs use the CPA designation to publicize their status as an accounting professional. c. The Fundamental Payroll Certification (FPC) exam has no eligibility requirement. It is open to all those who wish to demonstrate a baseline of payroll competency. The FPC is designed for entry-level payroll professionals and students, and APA membership is not required. d. The Certified Payroll Professional (CPP) exam does have eligibility requirements. Individuals must meet at least one of the three eligibility criteria: 1. Employed in the practice of payroll for at least three of the five years preceding the date of examination through either direct or related involvement in at least one of the following payroll industry areas: payroll production, reporting, accounting, systems, taxation, administration, education/consulting.

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Payroll Accounting Course Manual, Module 6

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2.

3.

Employed in the practice of payroll for at least the last 24 months and must have completed, within the last 24 months, all of the following three American Payroll Association (APA) courses: Payroll Practice Essentials, Intermediate Payroll Concepts, Advanced Payroll Concepts, and Strategic Payroll Practices or the following two APA courses: Payroll 101 and Payroll 201. Employed in the practice of payroll for at least 18 months, obtained an FPC designation, and must have completed, within the last 18 months, the following APA courses: Intermediate Payroll Concepts, Advanced Payroll Concepts, and Strategic Payroll Practices or the following APA course: Payroll 201.

e.

APA members receive newsletters, training opportunities, and are able to network with other professionals in the field. Details about membership are available on the APAs national website at http://www.americanpayroll.org/. I would encourage you to now consider membership in the American Payroll Association, and to also consider becoming certified in payroll. For more information see http://www.americanpayroll.org/certification/.

(See the following page for Supplement 2)

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Payroll Accounting Course Manual, Module 6

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Supplement 2
Comprehensive Illustration of the Determination of Illinois SUTA Tax Rates and Effect of Benefit Charges Upon SUTA Tax Expense Barrington Company has been in business from 20X1 through 20X8 and qualifies as a small business in the state of Illinois. The taxable wages for SUTA purposes in each of these years was $150,000, and the introductory SUTA rate given to the company in 20X1 was 3.3%. Part I. We will now calculate the SUTA tax rates and the amount of SUTA taxes paid for each of the years 20X1 through 20X8 assuming that no employees were laid off during the 8 year period. We will use a state Benefit Conversion Factor of 140% for each of the years in question, a fund building premium of .4%, and a State Experience Factor of 110% throughout the period. In the example, the minimum SUTA rate is .6%, and the maximum SUTA rate is 7.2%.

SUTA Tax Rate Calculations: 12/31/20X1 Incurred SUTA liability in each of the 3 prior calendar years? No. Tax rate=. 12/31/20X2 Incurred SUTA liability in each of the 3 prior calendar years? No. Tax rate = 12/31/20X3 Incurred SUTA liability in each of the 3 prior calendar years? No. Tax rate = 12/31/20X4 Incurred SUTA liability in each of the 3 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X3 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate 12/31/20X5 Incurred SUTA liability in each of the 4 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X4 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate
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3.3%

x $150,000 =

$ 4,950

3.3%.

x $150,000 =

$ 4,950

3.3%.

x $150,000 =

$ 4,950

$ $ 150,000 0% 1.1 0% 0.40% 0.40% 0.20% 0.60%

x $150,000 =

900

$ $ 300,000 0% 1.1 0% 0.40% 0.40% 0.20% 0.60%

x $150,000 =

900

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19

12/31/20X6 Incurred SUTA liability in each of the 5 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X5 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate 12/31/20X7 Incurred SUTA liability in each of the 5 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X3 through 6/30/20X6 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate 12/31/20X8 Incurred SUTA liability in each of the 5 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X4 through 6/30/20X7 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate Total SUTA Taxes Paid

$ $ 450,000 0% 1.1 0% 0.40% 0.40% 0.20% 0.60%

x $150,000 =

900

$ $ 450,000 0% 1.1 0% 0.40% 0.40% 0.20% 0.60%

x $150,000 =

900

$ $ 450,000 0% 1.1 0% 0.40% 0.40% 0.20% 0.60%

x $150,000 =

900

$19,350

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Payroll Accounting Course Manual, Module 6

20

Part II. Let us assume now that in the third year of operations an employee was laid off and drew $6,000 of state unemployment benefits all during the first half of 20X3. We will now recalculate the SUTA tax rates and SUTA taxes that must be paid and determine how much additional SUTA tax was paid because of the layoff.

12/31/20X1 Incurred SUTA liability in each of the 3 prior calendar years? No. Tax rate = 12/31/20X2 Incurred SUTA liability in each of the 3 prior calendar years? No. Tax rate = 12/31/20X3 Incurred SUTA liability in each of the 3 prior calendar years? No. Tax rate = 12/31/20X4 Incurred SUTA liability in each of the 3 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X3: Multiply by Benefit Conversion Factor: Total Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate Maximum SUTA rate applicable to small businesses: 12/31/20X5 Incurred SUTA liability in each of the 4 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X4 Multiply by Benefit Conversion Factor: Total Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate

3.3%.

x $150,000 =

$ 4,950

3.3%.

x $150,000 =

$ 4,950

3.3%.

x $150,000 =

$ 4,950

6,000 1.40 $ 8,400 $ 150,000 5.60% 1.1 6.16% 0.40% 6.56% 0.00% 6.56% 5.40%

x $150,000 =

$ 8,100

6,000 1.40 $ 8,400 $ 300,000 2.80% 1.1 3.10% 0.40% 3.50% 0.00% 3.50%

x $150,000 =

$ 5,250

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Payroll Accounting Course Manual, Module 6

21

12/31/20X6 Incurred SUTA liability in each of the 5 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X5 Multiply by Benefit Conversion Factor: Total Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate 12/31/20X7 Incurred SUTA liability in each of the 5 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X3 through 6/30/20X6 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate 12/31/20X8 Incurred SUTA liability in each of the 5 prior calendar years? Yes. Tax Rate: Benefit Charges in period 7/1/20X4 through 6/30/20X7 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.6%) and maximum (7.2%) limits SUTA Rate

6,000 1.40 $ 8,400 $ 450,000 1.87% 1.1 2.10% 0.40% 2.50% 0.00% 2.50%

x $150,000 =

$ 3,750

$ $ 450,000 0.00% 1.1 0% 0.40% 0.40% 0.20% 0.60%

x $150,000 =

900

$ $ 450,000 0% 1.1 0% 0.40% 0.40% 0.20% 0.60%

x $150,000 =

900

Total SUTA Taxes Paid

$ 33,750

Additional Taxes Paid (Case (a) versus Case (b) ($33,750-$19,350):

$ 14,400

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Group Discussion Question Problems and Exercises

Examination 4 follows Module 6. You should wait until you have received your scored discussion question answer before taking examination 4. Use the practice exam to prepare for the scored exam.

1.

Right to Receive Unemployment Benefits. Robert Rotweiler was laid off from his job at Cosmic Collar Company on February 15, 20X1, due to downsizing of the labor force. Robert did fall asleep at his job the week before and was reprimanded, but such infractions of company policy do not usually result in firing. Robert had been employed for six years at Cosmic Collar, earning $24,960 per year for the past two years, or $480 per week. Should Robert expect to receive unemployment benefits as a result of his termination? Why or why not? If Robert does quality for benefits and begins receiving them on Monday, March 1, 20X1, roughly what amount should he expect to receive per week and on what date would his unemployment expire (assume no extension of the standard benefit period has occurred)? Suppose Robert does begin receiving benefits, but injures his back while playing golf and is unable to return to work when recalled by his employer. Can Robert still continue to receive unemployment benefits? Who Must Pay Unemployment Taxes? Carolyn Cobb began a house cleaning business in 20X3. During the year she employed her niece, Candace Kernel, in the business. Candace worked only on Fridays, helping Carolyn on her bigger cleaning jobs. She was paid $100 each Friday that she worked. Assume there are 4 Friday workdays in each calendar month during 20X3. What is the amount of wages paid to Candace during each quarter of 20X3? Does Carolyn have to pay unemployment taxes? Why or why not? FUTA Credit for State Unemployment Taxes. Johnson Company has annual taxable wages for SUTA and FUTA purposes of $50,000 and has made all the required SUTA contributions (at a 5.4% rate) on time prior to filing Federal Form 940 on January 31. (a). What is the amount of FUTA taxes that Johnson will pay? (b). Now suppose $1,000 of the SUTA taxes were late and were paid after February 2. What is Johnsons FUTA tax payment now? (c). Redo parts (a) and (b) assuming the SUTA tax rate is 6.5% instead of 5.4%. (d). Now redo parts (a) and (b) assuming the SUTA tax rate is 3% instead of 5.4%. (HINT: See the supplement above for a guide to the solution of this problem). Abercrombie Company has been in business from 20X1 through 20X8. Assume that the taxable wages for SUTA purposes in each of these years are $100,000, and that the introductory SUTA rate given the company in 20X1 was 3.3%. The

2.

3.

4.

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Payroll Accounting Course Manual, Module 6 23

fund building premium is .4% throughout the period. Assume further that Abercrombie qualifies as an Illinois small business. Calculate the SUTA tax rates and the amount of SUTA taxes paid for each of the years 20X1 through 20X8 assuming that no employees were laid off during the 8 year period. Assume the state Benefit Conversion Factor is 140% for each of the years in question, and that the State Experience Factor is 110% throughout the period. The minimum SUTA rate is .6%, and the maximum SUTA rate is 7.2%. (a). Calculate the SUTA rate paid by the company in each of the 8 years. What is the total amount of SUTA taxes paid over the 8 year period? (b). Redo your work assuming now that in the third year of operations an employee was laid off and drew $5,000 of state unemployment benefits during the first half of 20X3. No other employees have drawn against the company. (c). Compare your answers in (a) and (b). How much additional SUTA tax was paid because of the layoff? 5. Determining SUTA and FUTA Tax Expense. Jetoff Travel Company employs four workers. The companys SUTA tax rate is 3.5% of the first $9,800 in earnings, and its FUTA tax rate is .8% of the first $7,000 of earnings. Complete the table, calculating the SUTA and FUTA tax expense for the companys current payroll.
Payroll Register Accumulated Earnings, YTD (excluding Current current wages) Wages 9,524 433 9,573 562 4,522 254 6,980 500 30,599 1,749

Employee Jackson, David Johnson, Gwen Jamison, John Janson, Janice Total

SUTA Taxes

FUTA Taxes

6.

Calculation of Minimum and Maximum SUTA rate. Assume the Illinois experience factor is 118%. Calculate the maximum and minimum SUTA tax rates for the year. Assume a fund building premium of .7% is in effect. -End-

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