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U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20210

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TEURL

ISSUE DATE

June 23, 1983

RESCISSIONS

 

EXPIRATION DATE

July 30, 1984

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 30-83

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

ROYAL S. DELLINGER
Administrator
for Regional Management

 

SUBJECT

:

Federal Unemployment Tax Credits for 1985 and Thereafter Under Recent Amendments to Federal Law

 

  1. Purpose. To explain what amendments are needed to State laws as a result of the increase in the Federal taxable wage base to $7,000 with respect to wages paid for employment in 1983 and thereafter and the increase in the gross Federal tax and in the ceiling on total allowable credits against the Federal unemployment tax with respect to wages paid for employment in 1985 and thereafter.

  2. References. P.L. 97-248 and UIPL 4-83.

  3. Background. The taxable wage base with respect to wages paid employment in 1983 and thereafter has been increased to $7,000.  The gross Federal tax on such wages has been increased by 0.1 percent to 3.5 percent for 1983 and 1984.  With respect to such wages paid in 1985 and thereafter, the gross Federal tax has been increased to 6.2 percent, and the total allowable credits have been increased to 5.4 percent against the gross tax.  All of those changes in the Federal law will have significant consequences for employers in all States, especially those with experience rating.

  4. State Laws. To assure that employers qualify for full allowable credits against the gross Federal unemployment tax with respect to wages paid for employment in 1985 and thereafter, SESAs should seek amendments to their laws, as appropriate, in the following respects.

    1. The taxable wage base with respect to wages paid in 1983 and thereafter should be at least $7,000.

    2. The standard rate for experience rating purposes should be at least 5.4 percent with respect to wages paid in 1985 and thereafter.

    3. All rates at 5.4 percent and below with respect to wages paid in 1985 and thereafter must be based on an employer's experience with his workers' risk of unemployment consistent with the requirements of section 3303(a)(l), FUTA, except as permitted under a transition provision mentioned below.

    4. The transition provision, over a period of four years from 1985 to and including 1988,applies to a "specific industry provision" of a State law, as defined, and as explained in the attachment to this letter.

    The reasons for, and an explanation of, the advice given above are contained inthe attachment to this letter.

  5. Action Required. SESAs should take timely action to assure amendment of their State laws as needed.

  6. Inquiries. Inquiries may be directed to the appropriate regional office or to Ted Wagman on 202-376-7308 or Jim Segraves on 202-376-7052.

  7. Attachment. Federal Unemployment Tax Credits and Experience Rating