The State of Florida recently paid off its Federal Unemployment loan, effectively reducing the Federal Unemployment Tax (FUTA) rate to 0.6% for the first $7,000 of wages rather than the increased 1.5% rate that was scheduled to be in effect for 2013 due to the outstanding loan. The FUTA tax rate for Florida employers was 1.2% for 2012 and was on track to increase to 1.5% for 2013 until the loan was satisfied. At the rate of 0.6%, an employer will pay FUTA tax in the amount of $42 per employee as compared to $105 per employee under the 1.5% tax rate. Due to the repayment of the loan, the credit reduction amount will not be reported on the 2013 Form 940.
Florida was one of 36 states to seek federal funds since the recession began. In May, the Florida Department of Revenue repaid $9.2 million to satisfy the balance of principal and interest owed. Assuming Florida does not borrow additional federal funds this year, the FUTA tax rate will revert to the 0.6% net FUTA rate. The Florida Unemployment Compensation Trust Fund was restored to solvency by a combination of (1) an improving economy, which has reduced the benefit payouts, (2) legislation, which increased UI taxes and also reduced the potential number of weeks of UI benefits payable, and (3) renewed focus on re-employment efforts.
If you have any questions regarding this information, please contact our office at (239) 433-5554. Our team of professionals welcomes the opportunity to discuss your specific situation further. You may also visit us on the web at www.markham-norton.com.