State and Local Tax Compliance Flashcards

An employer's State Unemployment Insurance (SUI) tax rate is primarily determined by:

Answer: The employer's unemployment claims experience (experience rating)

The experience rating system adjusts an employer's SUI rate based on the history of unemployment claims filed by former employees.

FUTA credit reduction is triggered when:

Answer: A state has an outstanding federal loan it has not repaid by November 10

When a state borrows federal funds to pay unemployment benefits and fails to repay the loan by November 10, its employers lose a portion of the 5.4% FUTA credit the following year.

New employers are typically assigned a SUI tax rate based on:

Answer: The average rate for their industry classification

New employers are generally assigned a standard SUI rate based on their industry average until they accumulate sufficient claims experience for an individual rate.

Which federal law requires employers to report new hires to a state agency, primarily to assist with child support enforcement?

Answer: PRWORA (Personal Responsibility and Work Opportunity Reconciliation Act)

PRWORA of 1996 mandates that employers report newly hired and rehired employees to state new hire registries to help locate parents for child support purposes.

State quarterly wage reports submitted to the state unemployment agency typically include:

Answer: Employee names, SSNs, and gross wages paid

Quarterly wage reports generally require each employee's name, Social Security number, and total gross wages to help states administer unemployment insurance claims.

When a reciprocity agreement applies, what should an employer do when a qualifying employee submits a non-residency exemption certificate?

Answer: Honor the certificate and withhold only for the employee's home state

When a valid reciprocity agreement exists and the employee submits the required exemption certificate, the employer withholds income tax only for the employee's state of residence.