thinglist-iconIt is official; November 10, 2017, FUTA deadline has passed.   California and the Virgin Islands remain on the list of states with an outstanding Title XII loan.   Employers will pay at a rate of 2.7% on the first $7000 paid to each employee for 2017.   The additional contributions for the year will need to be submitted with the final Federal Form 940 as of January 31, 2018.   Although California failed to repay the debt in 2017, they expect to have the loan repaid before November 10th of 2018 freeing employers from the high FUTA rate for 2018.   Virgin Islands has no proposed date for the repayment of their Title XII loan.

California and the Virgin Islands were not the only states who had outstanding Title XII loans.   By April of 2012, the Title XII loans hit an all-time high of $41 billion nationwide.   Only ten states did not need to borrow under the Title XII Loan Provision.    So, what was different about those ten states?    Based on a study completed by the Government of Accountability Office, those states had healthy trust fund balances.    From a study that spanned twenty-five years’ worth of recessions, a complicated formula named the Average High-Cost Multiple (or AHCM) was developed.  From this study, it was determined that if a state’s trust fund had an AHCM of 1.0 or higher, they would be able to finance most recessions without borrowing under the Title XII provision.    The legislation was passed requiring each state to have an AHCM of 1.0 by the end of 2019.  Beginning in 2014 each state was required to have an AHCM of 0.5.   Each year the requirement increased by 0.10 through the end of 2019.   As of December 31, 2016, only 40% of the states had met the 1.0 AHCM.    A review of the trust fund balances and the AHCM for December 31, 2017, will be released by mid-February 2018.

The state has made many attempts to become solvent by reducing the duration of benefits, rate schedules from 2012- 2014 were increased, three states changed the way they determine tax rates and a new war of claimant fraud has been put in place.   In 2015, the rates began to drop, and that trend continued through 2016 and 2017.  However, the taxable wage base has increased in several states.  In fact, currently, only four states have a wage base of $7000.   So far seventeen states have issued their 2018 unemployment tax rates.   Massachusetts, Oklahoma, and Ohio have increased rate schedules.   Vermont, Wisconsin, Kentucky, and Utah have decreased their rates.  The other nine states have remained the same.  With the deadline of December 31, 2019, quickly approaching, we may see more increased rate schedules for 2018 than we did for 2016 and 2017.   The reward for reaching the 1.0 AHCM is an interest-free loan should your state need to borrow under the Title XII provision.    This could save employers hundreds of millions of dollars if a loan is needed.


Contact CCC to see how we can save your organization time and money.
Contact our Sales Team
(800) 207-6926

Featured Videos

View All Videos

Latest News

Close

Sales

Your Name:*

Title:

Company Name:*

Company Address:

Company City:

Company State:

Company Zip:

Number of Employees:

Your Email:*

Phone Number:*

Fax Number:

Check the boxes below if you wish to receive information on any of the following:

Unemployment Cost ControlTax Credits & Incentives (WOTC)Employment / Wage Verification

Your Message:

Employment & Income Verfication

Your Name:*

Title:

Company Name:*

Company Address:

Company City:

Company State:

Company Zip:

Number of Employees:

Your Email:*

Phone Number:*

Fax Number:

Your Message: