Published Nov. 9, 2012
S.C. businesses can receive a full 5.4% credit on federal unemployment taxes for 2012, according to the S.C. Department of Employment and Workforce.
The state’s businesses are getting the full credit for the unemployment tax, commonly referred to as FUTA, because South Carolina has received conditional approval from the U.S. Department of Labor to avoid a potential 0.9% credit reduction.
“This is good news for our great state’s businesses, which will reap the benefits of FUTA cost savings for the second consecutive year,” said Abraham J. Turner, executive director of the agency. “It also marks a positive overall trend for our entire state as the FUTA credit shows our unemployment trust fund is well on its way to solvency.”
Federal law requires a reduction in the FUTA tax credit when a state has outstanding federal unemployment loans for two consecutive Januarys and has not made sufficient voluntary payments toward the loan and other solvency improvement measures.
However, borrowing states that meet certain criteria can formally ask the Labor Department for the credit reduction to be avoided.
Part of the criteria is that South Carolina makes a voluntary payment of $106.5 million toward the loan balance before Nov. 9. The state made the payment in August.
It is anticipated that the state, which still owes the federal government $675.7 million, will continue to avoid the federal penalties each year as it continues to pay down the loans, the agency said.
South Carolina borrowed nearly $1 billion between December 2008 and spring 2011 to cover unemployment benefits. It is scheduled to repay the entire loan by the end of 2015.
The 2013 state unemployment tax rate table can be accessed on the agency’s website.
Businesses should expect to receive their specific rates in December.