So how will states be paying for Title XII Unemployment Loans?
the past few years, states have been forced to borrow from the Federal Government
to pay benefits as coffers have become depleted due to the extended high unemployment. There
are currently 32 states borrowing under Title XII.
in states that aren’t able to pay back their loans within specified time periods will
see FUTA Credit reductions. At least
three states (Indiana, Michigan & South Carolina) have 2010 retroactive reductions,
and employers in 21 other states will see FUTA Credit reductions if they don’t find
alternative ways to pay back their loans in 2011.
question on employer’s minds has understandably been “How will the states pay back
the loans and how will it affect my organization”? Well,
employers will probably see anything from increased tax rates, higher wage bases and
in some cases, special assessments. All
are designed to try and pay back outstanding loans and build the state unemployment
trust funds back up.
an example, in Arizona, HR
2025 was recently introduced and if passed, will create a
special assessment to pay interest and principal on Title XII loans;
of taxable wages for 2011 billed in the third quarter and due by the end of the fourth
least 0.6% of taxable wages for 2012 billed in the second quarter and due by the end
of the third quarter
it’s not clear how the states will fund the repayment of these loans, it is clear
that employers will probably foot most of the bill. In
order to help minimize their exposure, employers should keep close tabs on what is
happening in the states in which they do business and have processes in place to ensure
they are not paying any unwarranted costs.
This weblog is sponsored by TALX.
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