Virgin Islands Faces FUTA Credit Reduction for 2021
According to the U.S. Department of Labor (DOL), the U.S. Virgin Islands could not pay its federal loans by the November 10, 2021, deadline and will lose the full Federal Unemployment Tax Act (FUTA) credit for 2021. It will have a credit reduction of 3.3% for 2021 [DOL, Final 2021 Federal Unemployment Tax Act (FUTA) Credit Reductions, rev. 11-10-21]. The territory has been subject to a FUTA credit reduction in past years.
The additional FUTA tax must be deposited by the due date of the 2021 federal Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, which is due January 31, 2022. The 2021 Schedule A (Form 940) will contain the official list of credit reduction states/territories, and the credit reduction total from Schedule A is reported on Form 940. Both forms will be available from the IRS when they are finalized.
Interested in more state and local payroll coverage? APA’s PayState Update eNewsletter is perfect for you.
Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for the APA