It’s important to begin planning your FUTA credit reductions for the 2016 tax year. These will affect your Form 940 filing and payment which is due on January 31, 2017.
What You Need to Know
Credit reduction rates are expected to increase for employers in California and the Virgin Islands for the 2016 FUTA tax year, and if you operate in any of the jurisdictions listed below, you could also be subject to a special Benefit Cost Ratio (BCR) add-on tax for 2016. California and the Virgin Islands have submitted BCR add-on waiver requests with the U.S. Department of Labor and will likely be granted the requested waivers. Connecticut and Ohio have repaid their federal loans and will not be subject to the credit reductions or the BCR add-on if they maintain a zero loan balance on the November 10, 2016. The U.S. Department of Labor (DOL) will identify states affected by the FUTA BCR at a later date.
The potentially impacted jurisdictions are California, Connecticut, Ohio and Virgin Islands. You can find anticipated rate information here: U.S. Department of Labor Release, August, 2016
For more information on FUTA state credit reductions, click here.
What’s Next
As a part of the services we provide, ADP will deduct any FUTA amounts due from your account and file the Form 940 on your behalf. You’ll see debits for this activity on your January invoice.
If you have any questions regarding this alert, please contact your Relationship Manager or Service Team.