Filing Frequency and Unemployment Insurance Notices

Every  fall,  the  IRS  and  the state  in  which  your  business  resides  will  review  whether  your filing  frequency  requirement for withholding taxes (as well as for sales and use tax and other specialty taxes in your state) is appropriate. Both your federal and state deposit schedules can change. The deposit schedule you must use is based  on  the total  tax liabilities  you  previously  reported  on  forms  during  the specified  lookback  period.  In  general, the higher the tax liabilities you have reported the more frequently you must remit your taxes. It is common for a new business to start at a lower deposit frequency and then get increased to more frequent.

You will receive a notice if your filing frequency changes. These notices will arrive soon, if they have not yet already. Note that if your business has a fiscal year schedule, you may be notified a few months before the  beginning of your fiscal year, and not necessarily now.

By  now  you  should  have  also  received  notice  if  your  state  unemployment  insurance  rate  (SUTA  tax)  is  changing for 2024. SUTA tax is a percentage of an employee’s wages. This rate can, and often does, change every  year. Each state sets a different range of tax rates. Your tax rate might be based on factors like your  industry, how many former employees received unemployment benefits, and how long your business has been in existence.

The federal unemployment insurance rate (FUTA tax) does not change, so you will not receive a notice for this.  If  you’re  not  aware,  the  FUTA  tax  rate  is  6.0%.  The  tax  applies  to  the  first  $7,000  you  pay  to  each  employee as wages during the year. Generally, if you paid wages subject to SUTA, you may receive a credit of up to 5.4% of FUTA taxable wages when you file your annual Form 940. If you're entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.6%. This results in up to $42 in FUTA taxes per employee.

PPG Partners may receive duplicate copies of the notices mentioned above, but this is not always the case. Please be sure to forward a copy of any notices to PPG Partners, especially if we complete your payroll. We will need these for your payroll beginning January 1, 2024.