State Unemployment Taxes and SUTA Dumping (CRS Report for Congress)
| Release Date |
May 27, 2005 |
| Report Number |
RS22069 |
| Report Type |
Report |
| Authors |
Steven Maguire, Government and Finance Division; and Julie M. Whittaker, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
Summary:
This report provides a summary of the State Unemployment Tax Acts (SUTA) Dumping
Prevention
Act of 2004, P.L. 108-295 . The term "SUTA dumping" refers to a variety of tax planning strategies
used by employers to minimize the tax burden of federally mandated state unemployment taxes. The
strategies exploit the differences in methods state employ to determine unemployment tax rates
among established employers and the method by which states determine the tax rate of new firms
and firms that have either created new subsidiaries or have absorbed other firms. SUTA dumping
creates tax inequities when firms avoid their appropriate state unemployment taxes. Firms that
follow state unemployment tax law are burdened with additional taxes as a result of the tax
avoidance by the firms that engage in SUTA dumping. This report will be updated as legislative
activities warrant.
