FUTA Credit Reductions Pose Potential Threat for 2022

Federal unemployment tax credit reductions are likely to affect multiple states for 2022, and employers should prepare to pay additional costs, payroll professionals said March 22.

The high unemployment rates caused by the pandemic led multiple states to borrow from the federal unemployment account, said Douglas Holmes, president of Strategic Services on Unemployment & Workers’ Compensation (UWC). If the loans are not repaid by Nov. 10, the amount of the tax credit permitted under the Federal Unemployment Tax Act would be reduced in those states for 2022.

Nine states and the U.S. Virgin Islands are at risk of being assessed ...