Federal Loan Interest Payments and FUTA Tax Credit Reductions
The Social Security Act (SSA) requires states to make full unemployment benefit payments when due in order for the United States Secretary of Labor to certify the state’s Unemployment Insurance (UI) Program.
The SSA also allows states to borrow money from the federal account to make its required payments for unemployment benefits. Employers in states that are in conformity with the SSA are allowed federal tax credits. The credit may be as much as 5.4 percent of Federal Unemployment Tax Act (FUTA) taxable wages. If Missouri did not borrow money to fund its unemployment benefit payments and maintain compliance with the SSA, employer tax credits would have been at risk. Failure to borrow federal funds could have been costly to employers.
Missouri’s outstanding federal loan balance as of October 1, 2013, is $322,320,858.70.
The Division of Employment Security made a $220 million payment on the federal loan in May 2013, saving employers $2.1 million in interest for 2013.
Because Missouri did not completely repay the outstanding loan by November 10, 2013, employers are subject to a FUTA credit reduction of 0.9 percent for calendar year 2013.
For more information, call 573-751-1995.