FUTA Tax Increases - Digit Payroll
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FUTA Tax Increases


The IRS giveth and then taketh away:  FUTA Tax Rate Increases


Employers in 20 states owe higher tax rates in 2011, including New York, New Jersey and Pennsylvania.  The rate increases for states that have not repaid their loans from the federal unemployment fund.  The rate goes up .3% from .6% to .9% currently.  Here is the timeline of what happened to the FUTA rate for 2011.  From 1/1/2011 to 6/30/2011 the rate was .8%.  From 7/1/2011 to 12/31/2011 the rate changed to .6%.  Then at the end of November the DOL announced the retro rate adjustment for the 20 states.  So now the rate needs to be retroactively adjusted from 1/1/2011 to 6/30/2011 to 1.1% and from 7/1/2011 to 12/31/2011 to .9%.
Confused?  You’re not the only one.  This type of retroactive rate adjustment wrecks havoc on payroll systems.  Digit Payroll must dedicate an additional 40 hours of development time and 60 hours of customer service time to handle the change.