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All of the states have now announced their taxable wage bases for 2012. As usual, there are a number of increases over the wage bases set last year. In addition, Nevada has a decrease in its taxable wage base for 2012. In the table below, states having higher 2012 wage bases than the 2011 wage bases are printed in bold. Nevada, with its lower amount, appears in italics.
FUTA tax figures for 2012. The taxable wage base under the Federal Unemployment Tax Act remains $7,000 for 2012. In addition, all 50 states, as well as the District of Columbia, Puerto Rico and the Virgin Islands, have received certifications for the maximum additional credit allowable based on the 12-month period ending on October 31, 2011.
0.2% surtax expires. The FUTA tax rate is 6.2% for wages paid on or after January 1, 2011, through June 30, 2011. It decreases to 6.0% for wages paid after July 1, 2011, through December 31, 2011, because of the mid-year expiration of the FUTA surtax. As we go to press, there has been no legislation reenacting the surtax for either the latter part of 2011 or for 2012.
Credit reduction states. Employers that pay their state unemployment tax timely and in full receive a 5.4% credit. However, that credit is reduced when a state has outstanding federal loans for two consecutive Januarys. The reduction is 0.3% for the first year and an additional 0.3% for each succeeding year until the loan is repaid. A state that has not repaid the money it has borrowed is called a credit reduction state.
The 0.3% credit reduction states for 2011 (for taxes paid in 2012) are Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Virginia and Wisconsin, plus the U.S. Virgin Islands. Indiana is a 0.6% credit reduction state and Michigan is a 0.9% credit reduction state. South Carolina has received conditional approval for the full FUTA credit.
Taxable wage bases for 2012.
| State | 2012 Wage Base |
| Alabama | 8,000 |
| Alaska | 35,800 |
| Arizona | 7,000 |
| Arkansas | 12,000 |
| California | 7,000 |
| Colorado | 11,000 |
| Connecticut | 15,000 |
| Delaware | 10,500 |
| District of Columbia | 9,000 |
| Florida | 8,500 |
| Georgia | 8,500 |
| Hawaii | 38,800 |
| Idaho | 34,100 |
| Illinois | 13,560 |
| Indiana | 9,500 |
| Iowa | 25,300 |
| Kansas | 8,000 |
| Kentucky | 9,000 |
| Louisiana | 7,700 |
| Maine | 12,000 |
| Maryland | 8,500 |
| Massachusetts | 14,000 |
| Michigan | 9,500 |
| Minnesota | 28,000 |
| Mississippi | 14,000 |
| Missouri | 13,000 |
| Montana | 27,000 |
| Nebraska | 9,000 |
| Nevada | 26,400 |
| New Hampshire | 14,000 |
| New Jersey | 30,300 |
| New Mexico | 22,400 |
| New York | 8,500 |
| North Carolina | 20,400 |
| North Dakota | 27,900 |
| Ohio | 9,000 |
| Oklahoma | 19,100 |
| Oregon | 33,000 |
| Pennsylvania | 8,000 |
| Puerto Rico | 7,000 |
| Rhode Island | 19,600* |
| South Carolina | 12,000 |
| South Dakota | 12,000 |
| Tennessee | 9,000 |
| Texas | 9,000 |
| Utah | 29,500 |
| Vermont | 16,000 |
| Virgin Islands | 23,700 |
| Virginia | 8,000 |
| Washington | 38,200 |
| West Virginia | 12,000 |
| Wisconsin | 13,000 |
| Wyoming | 23,000 |
* Rhode Island has a two-tier taxable wage base for 2012. For most employers it will be $19,600. For those in the highest tax group (9.79%), the taxable wage base will be $21,100.
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Employers are now required to include the date of hire for each new employee submitted to the South Dakota New Hire Reporting Center, effective as of January 16, 2012, according to the South Dakota Department of Labor and Regulation and the Department of Social Services.
The date of hire is considered to be the date an employee first performed services for pay. This requirement was enacted in Section 802 of the Claims Resolution Act of 2010 (CRA; Pub. L. No. 111-291) signed into law by President Barack Obama on December 8, 2010.
The Personal Responsibility and Work Opportunity Act of 1996 and South Dakota Codified Law 25-7A-3.3 requires all public, private, non-profit and government employers to report all employees who are newly hired, rehired or who return to work after a separation of 30 or more days. This includes full-time, part-time, seasonal and temporary employees, both adults and minors. Reports are due to the New Hire Reporting Center within 20 days of hire.
In addition to the date of hire, employers must submit the employee name, address and social security number and the employer business name, address and federal identification number. New Hire Reporting Center information is mainly used to match against child support records to locate parents and establish or enforce child support orders. Additional information is available from the South Dakota Department of Labor Internet website at http://www.sdjobs.org. (South Dakota Department of Labor and Regulation News Release, January 9, 2012, http://dlr.sd.gov/news/releases12/nr010912_newhire.pdf.)
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The IRS has released final regulations relating to the exclusion from gross income for amounts received on account of personal physical injuries or physical sickness. The final regulations reflect amendments made by the Small Business Job Protection Act of 1996 (P.L. 104-188) and affect taxpayers receiving damages on account of personal physical injuries or physical sickness and taxpayers paying these damages.
The final regulations adopt without substantive change proposed regulations (NPRM REG-127270-06) issued on September 15, 2009. The proposed regulations deleted the requirement that, to qualify for exclusion from gross income, damages received from a legal suit, action, or settlement agreement must be based upon "tort or tort type rights." The proposed regulations provided, instead, that the Code Sec. 104(a)(2) exclusion may apply to damages recovered for a personal physical injury or physical sickness under a statute that does not provide for a broad range of remedies, and that the injury need not be defined as a tort. These regulations are effective January 23, 2012, and apply to damages paid pursuant to a written binding agreement, court decree, or mediation award entered into or issued after September 13, 1995, and received after January 23, 2012. (T.D. 9573, January 20, 2012.)
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For 2012, the minimum rate is 2.02% and the maximum rate is 5.4%, except that employers participating in the short-time compensation program will be subject to a maximum rate of 6.4%. New employers pay 2.7% in 2012. The noncharge ratio is .0057, the excess payment ratio is .0089, the gross benefit ratio is .0275, the multiplier is 1.1382, the fund size ratio is .0167, and the final adjustment ratio is .0313. There also will be a special tax assessment in effect for 2012 to assist in repaying the interest on the state’s Title XII loan, but that amount is not available yet (DEO Communication, Fla. ¶1120).
(Read Intelliconnect) »For calendar year 2012, the adjusted state experience factor is 139% and the benefit conversion factor remains at 138.4%. Total rates range from 0.550% to 9.450%, including the 0.550% fund building factor in effect for 2012. An employer whose contribution rate is 5.40% or higher and whose total quarterly wages are less than $50,000 pays contributions at 5.40% in that quarter. New employers pay 4.350% for 2012, which includes the 0.550% fund building factor. The Act dictates that employers pay higher entry rates if they are in a North American Industrial Classification System (NAICS) sector that has an average tax rate above the standard entry rate. New construction sector employers pay 5.250% in 2012 (DES Communication, Ill. ¶1120).
(Read Intelliconnect) »Effective January 1, 2012, the maximum weekly benefit amount in Illinois for an individual is $403, the maximum weekly benefit amount for an individual with a nonworking spouse is $480, and the maximum weekly benefit amount for an individual with a dependent child or children is $549 (DES Communication, Ill. ¶1910).
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