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Missouri will not be a Credit Reduction State in 2014

From the Division of Employment Security

Missouri has retired its Unemployment Insurance Trust Fund obligation one year ahead of prior projections saving Missouri employers $186 million in federal taxes for 2014. Therefore, Missouri will not be a credit reductions state for 2014.

The Social Security Act (SSA) requires a state to make full unemployment benefit payments when due in order for the United States Secretary of Labor to certify the state’s Unemployment Insurance Program.

The SSA also allows a state to borrow money from the federal account to make its required payments for unemployment benefits. Employers in states that are in conformity with the SSA are allowed federal tax credits. The credit may be as much as 5.4 percent of Federal Unemployment Tax Act (FUTA) taxable wages.

If Missouri did not borrow money to fund its unemployment benefit payments and maintain compliance with the SSA, employers’ tax credits would have been at risk. Failure to borrow those federal funds could have been costly to employers.

For questions concerning this topic, please contact the state Division of Employment Security at: (573) 751-1995.

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