New York State Loan Default and Consequences
New York State borrowed $400 million from the federal government in 2003 to keep the NY state unemployment insurance fund solvent in the wake of a surge of layoffs post-9/11. Federal law provides the borrower two years to repay the debt before a mandatory federal FUTA tax assessment is levied to make up the debt.
The state defaulted on the federal loan in November 2004. As a consequence, NYS employers are required to pay additional Federal Unemployment Tax Act (FUTA) contributions in both 2004 and 2005. The 2005 extra surcharge - or credit reduction- in FUTA contributions is 0.6% of wages subject to NYS Unemployment. This additional assessment amounts to a maximum of $42 per employee for the year. The increase amounts to a 75% increase in an employer's FUTA expense.
posted by Kathleen Webb at
3:04 PM
2 Comments:
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