BSI TaxFactory provides for the possibility that, once a state has a credit reduction, it may carry that reduction into the following year. BSI expects to issue the 2012 rates for all applicable authorities via BSI TaxFactory Regulatory Bulletins by the end of January.
BSI TaxFactory enables employers to budget for reductions in their FUTA credit by providing the ability to calculate the tax that could be owed if their state remains in arrears.
Background: When a state has outstanding federal loans for two years, federal law provides for a reduction in the FUTA tax credit. The reduction is 0.3% for the first year, and an additional 0.3% for each succeeding year until the loan is repaid.
For example, as of 2011 Michigan had an outstanding federal loan for three years. The federal credit reduction for 2011, which is due January 31, 2012, is 0.9%.