The US Department of Labor has confirmed that four states remain on the FUTA credit reduction state list.   California, Ohio, and the Virgin Islands will pay $147 per employee instead of $42 per employee (at 0.6%).   A BCR (Benefit Cost Ratio) add on would have applied to each of these states if the waiver and or a FUTA Cap had not been requested.     Connecticut employers will pay a record high amount of $189 per employee by paying at a FUTA rate of 2.7%.   Indiana, Kentucky, New York, North Carolina, and South Carolina repaid their loans during 2015 and remained off of the credit reduction list.

In the UWC meetings last June, the Governor of California informed all attendees that California expects to repay their Title XII loan by 2017.   According to the governor, with more individuals going back to work, more contributions will come in allowing California to repay some of the debt.  California employers have never paid interest on their Title XII loans because the governor borrows from the disability fund and pays the interest directly.

Connecticut had announced in early 2015 that they were working on a bill that would allow them to repay the Title XII loan.  The bill never matured.   The BCR add on was applied to Connecticut for the 2014 and 2015 rate years.   The BCR add on was put in place to assist states in repaying a long term Title XII debt.    The opinion of the governor of Connecticut was that it might be better if the debt was repaid in FUTA taxes by the employer.    There is a possibility that Connecticut will repay their loan in 2016.

Ohio expects to repay their loan before the December 10, 2016 deadline.   If the Title XII loan is repaid, employers will pay at a 0.6% rate on the first $7,000 for each employer.  Ohio employers would owe interest up to the date of the repayment that is due September 30, 2016, unless the state also repays that portion of the debt as well.   Virgin Islands has not released its plan of repayment of the Title XII loan.   The Virgin Island loan balance is reducing slowly, as compared to other taxing districts. Keep in mind that FUTA taxes paid by the employer in excess of the normal 0.6% FUTA rate, go to repay the loan balance.

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The FUTA Form 940 is available for download from the US Department of Labor at www.ows.doleta.gove/unemploy/finance.asp.


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