If an employer fails to pay state unemployment taxes on a timely basis, the rate on FUTA taxes will
A. remain the same
B.be lower
C. increase by 100 percent
D. increase
I chose D can someone check my anser
This is a legal question rather than theory. I believe that a state unemployment tax generates a credit against FUTA taxes, but only if the state taxes are paied on a timely basis. So, I think yes, D is correct.
Thanks
To determine the correct answer, you can refer to the rules and regulations set by the Internal Revenue Service (IRS). The Federal Unemployment Tax Act (FUTA) requires employers to pay taxes to fund unemployment benefits at the federal level.
If an employer fails to pay state unemployment taxes on time, it can potentially affect the FUTA tax rate. The correct answer is C. The FUTA tax rate can increase by 100 percent if the employer fails to pay state unemployment taxes in a timely manner.
The reasoning behind this is that FUTA tax rates are influenced by the amount of state unemployment taxes paid by the employer. When an employer pays state unemployment taxes on time, they are eligible for a tax credit against their FUTA taxes, reducing the overall amount owed. However, if the employer fails to pay state unemployment taxes, they are not eligible for the full tax credit, resulting in an increased FUTA tax rate.
It's important to note that the specific tax rates and penalties may vary based on the state and individual circumstances. To get the most accurate and up-to-date information, it's recommended to consult the IRS guidelines or seek advice from a tax professional.