February 18, 1992
Businesses With Employees
in Michigan Get Extra Time
WASHINGTON - Business that pay federal unemployment tax (FUTA)
on wages to employees in Michigan have until June 30, 1992 to pay
any additional FUTA amount that is owed because of overdue
unemployment insurance loans made by the federal government to the
State of Michigan.
The Internal Revenue Service said that the extension of time to
pay is contained in the Emergency Unemployment Compensation Act of
1991 Extension signed into law by the President on Feb. 7, 1992.
FUTA usually is paid by employers at the effective rate of
eight-tenths of one percent of the first $7,000 of wages paid each
employee, for a maximum of $56 per employee. This effective rate is
achieved by providing employers a 5.4% credit against the statutory
6.2% FUTA rate.
For 1991, an effective FUTA rate of 1.6% applies to the first
$7,000 of wages paid to employees in Michigan. Only employers with
employees in Michigan are subject to this increased FUTA tax rate
for 1991. The additional tax will repay funds Michigan borrowed from
the federal government to pay unemployment benefits.
IRS said employers who elect to defer payment of the additional
tax should be certain to send it to the IRS by June 30, 1992 with a
letter of explanation including the employer's name, address and
employer identification number.
The extension does not apply to filing Form 940 annual federal
unemployment tax form or payment of the normal FUTA taxes, due for
1991 by January 31, 1992. Employers who have not yet filed Form 940
should be certain to report the additional FUTA amount on line 6,
even though it need not be paid until June 30.
IRS said employers who receive a notice from the IRS before
June 30 regarding non-payment of the additional tax should write on
the notice that they elect the payment deferral under the Emergency
Unemployment Compensation Act and return the notice to the IRS.
Although the extension legislation allows extra time to pay the
additional FUTA without penalty, interest will be charged on
deferred payments. After receiving payment of the tax, the IRS will
send employers a bill for interest due.
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