FUTA Rate Change

Currently employers pay a 6.2% unemployment tax (a 6% permanent tax and a .2% temporary surtax) on the first $7,000 of employee wages. The .2% temporary surtax will expire on June 30, 2011. The IRS has indicated that employers will need to separately track FUTA taxable wages paid before July 1 and after June 30. We expect that Congress will not extend the surtax before the end of June. Therefore, the IRS will revise Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.