One of my clients, an Alabama employer, has been assessed with an additional payroll tax for 2010. If I understand it, here is what happened.
Although we normally think of FUTA in terms of 0.8% employer tax, the true rate is 6.2% with a credit of (normally) 5.4% for any amount paid to SUTA under the same base. The SUTA in every state is governed, at least to some extent, by the FUTA law.
The law permits states to borrow from the Feds to cover unemployment benefits. If a state fails to pay the Fed back, then the employer is not entitled to the full 5.4% credit.
SOOOOOO... in 2010 Alabama borrows money from the Fed, and pays the money back, but LATE. Fed assesses interest expense upon the State of Alabama. Now Alabama is assessing Alabama employers to pay for this interest that they had to pay. We are told this is a one-time charge for the calendar year 2010 (as if it will never happen again).
My client is only being assessed $43, so it will be paid. However, he is furious that the state is able to push the results of their miserable management down onto Alabama employers. My question: Can they really do this?
FYI, Alabama does have some very large employers, GM parts (Saginaw) in Decatur, Mercedes in Tuscaloosa, Pratt/Whitney in Mobile, etc. I'll almost betcha these huge employers tell the State to take a long walk off a short plank.
Although we normally think of FUTA in terms of 0.8% employer tax, the true rate is 6.2% with a credit of (normally) 5.4% for any amount paid to SUTA under the same base. The SUTA in every state is governed, at least to some extent, by the FUTA law.
The law permits states to borrow from the Feds to cover unemployment benefits. If a state fails to pay the Fed back, then the employer is not entitled to the full 5.4% credit.
SOOOOOO... in 2010 Alabama borrows money from the Fed, and pays the money back, but LATE. Fed assesses interest expense upon the State of Alabama. Now Alabama is assessing Alabama employers to pay for this interest that they had to pay. We are told this is a one-time charge for the calendar year 2010 (as if it will never happen again).
My client is only being assessed $43, so it will be paid. However, he is furious that the state is able to push the results of their miserable management down onto Alabama employers. My question: Can they really do this?
FYI, Alabama does have some very large employers, GM parts (Saginaw) in Decatur, Mercedes in Tuscaloosa, Pratt/Whitney in Mobile, etc. I'll almost betcha these huge employers tell the State to take a long walk off a short plank.
Comment