November 30, 2021 Final Virgin Islands 2021 FUTA credit reduction released, additional Benefit Cost Rate waived; October 2021 jobless rate decreased The U.S. Department of Labor (USDOL) released the final federal unemployment tax (FUTA) credit reduction for calendar year 2021 (paid with the 2021 Form 940) which shows that the Virgin Islands is again the only jurisdiction with a FUTA credit reduction because it continued to have an unpaid federal unemployment insurance (UI) loan balance on November 10, 2021. 2021 FUTA credit reduction for the U.S. Virgin Islands Because a loan balance was still outstanding on November 10, 2021, Virgin Islands employers will pay a FUTA tax rate for calendar year 2021 of 3.9%, composed of a FUTA credit reduction rate of 3.3% and the 0.6% minimum FUTA tax rate. As has occurred in previous years, the territory requested a waiver of, and was approved for, the additional Benefit Cost Rate (BCR) for 2021. Had the waiver not been approved, the total FUTA tax rate for Virgin Island employers would have been 4.2%. The additional FUTA taxes will be used to pay down Virgin Islands' federal UI loan balance. The increased 2021 FUTA taxes will be due from Virgin Islands employers with their fourth-quarter 2021 FUTA tax deposit (Form 940), due February 1, 2022.
Legend 1 BCR courtesy of the US DOL. A 2.7 (not a percentage) add-on could apply if the BCR add-on is waived; however, this is not the case for 2021. States with outstanding federal UI loan balances as of November 10, 2022 run FUTA credit-reduction risk for 2022 States that began accepting federal UI loans in 2020 and fail to repay their loan balances in full by November 10, 2022, run the risk of a FUTA credit reduction of 0.3% for calendar year 2022 (paid with the 2022 Form 940). As of November 18, 2021, 10 states still have outstanding loan balances for loans that began in 2020, as shown below. (US Treasury Direct website.)
October 2021 total nonfarm payroll increased slightly; jobless rate decreased The U.S. Bureau of Labor Statistics reports that the national rate of unemployment decreased to 4.6% for October 2021, down from 4.8% for September 2021. Total nonfarm payroll increased by 531,000 in October 2021. (USDL-21-1930, the employment situation for October 2021.) At the start of the pandemic, the national rate of unemployment was 3.5% for February 2020 and 4.4% for March 2020. (Historical Employment Situation reports may be found here.) Following are national jobless rates for the months following March 2020:
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——————————————— EY Payroll News Flash
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