Notice of FUTA credit reduction applicable in 2019
Tuesday, December 17, 2019

Notice of FUTA credit reduction applicable in 2019

By Payroll and Entitlements Editorial Staff

Sections 3302(c)(2)(A) and 3302(d)(3) of the FUTA provide that employers in a state that has outstanding advances under Title XII of the Social Security Act on January 1 of two or more consecutive years are subject to a reduction in credits otherwise available against the FUTA tax for the calendar year in which the most recent such January 1 occurs, if advances remain unpaid on November 10 of that year. Further, Section 3302(c)(2)(C) of FUTA provides for an additional credit reduction for a year if a state has outstanding advances on five or more consecutive January 1 and has a balance on November 10 for such years. Section 3302(c)(2)(C) also provides for waiver of this additional credit reduction and substitution of the credit reduction provided in Section 3302(c)(2)(B) if a state meets certain conditions.

Employers in the U.S. Virgin Islands (USVI) were potentially liable for the additional credit reduction under Section 3302(c)(2)(C) of FUTA. The jurisdiction applied for a waiver, though. The Employment and Training Administration determined that USVI met all of the criteria necessary to qualify for the waiver of the additional credit reduction. Therefore, employers in USVI will have no additional credit reduction applied for calendar year 2019. However, as a result of having outstanding advances on each January 1 from 2010 through 2019, and also having an outstanding balance on November 10, 2019, employers in USVI are subject to a FUTA credit reduction of 2.7 percent in 2019 (84 Fed. Reg. 65423, November 27, 2019).

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More