There are two changes to payroll taxes that were announced this month. Congress dropped the .2% federal unemployment tax (FUTA) surcharge reducing the rate from 6.2% to 6% effective July 1, 2011. Employers still receive the 5.4% credit for paying state unemployment taxes (SUTA) on time, reducing the FUTA rate to .6%.

The Arizona State Legislature passed a law creating a special assessment of .4% of taxable wages retroactive to January 1, 2011. In 2012 the special assessment will increase to .6% of taxable wages. The action was necessary in order to meet federally imposed unemployment trust fund obligations and to prevent a substantial FUTA increase for Arizona businesses. In September Arizona employers will receive a notice for Arizona Department of Economic Security telling them the amount they owe for this assessment through second quarter.

Reports for third quarter and going forward will include this special assessment. If you are a TAO client, when you receive this letter, forward it to your Accounting Associate who will verify that ADES did in fact calculate the correct assessment. It will be paid with your third quarter SUTA payment which is due by October 31, 2011.

The net effect of these actions is a .2% increase for 2011 and .4% increase for 2012. Both FUTA and SUTA are payable the first $7,000 of an employee’s pay. Make sure you talk with your Phoenix accountant about these new changes.


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