Taxact Tax Advance

[Ailene Goldhirsh]

TheFederal Unemployment Insurance Tax Act (FUTA), Sections 3302(c)(2) and 3302(d)(3), provides that employers in states that have an outstanding balance of advances under Title XII of the Social Security Act at the beginning of January 1 of two or more consecutive years are subject to a reduction in credits otherwise available against the FUTA tax, if all advances are not repaid before November 10 of the taxable year. These credit reductions are made from the regular credit reduction of 5.4%. So, while, employers in states without a further credit reduction will have a FUTA tax rate of .6% (on the first $7,000 of wages paid) for the year, employers in states with a further credit reduction due to an outstanding balance of advances will incur a FUTA tax rate of .6% + FUTA credit reduction.

In addition, following the third and fifth January 1st with an outstanding Federal advance, employers in those states are potentially subject to additional credit reductions as outlined in FUTA Sections 3302(c)(2).

Tables are provided for the actual credit reductions that have been applied historically, and, because the final credit reduction for any given year is not determined until Nov. 10 of that year, a list of potential credit reductions is provided for the current year when applicable.

If you have any questions or desire further information, please contact Kevin Stapleton (Staplet...@dol.gov) or Dyana Cornell (Cornel...@dol.gov) at the Division of Fiscal and Actuarial Services.

Electronically filed tax returns will be rejected if the taxpayer is required to reconcile advance payments of the premium tax credit (APTC) on Form 8962, Premium Tax Credit (PTC), but does not attach the form to the tax return. When the IRS rejects the return through the software the taxpayer is using, the taxpayer will see a brief explanation about what to do to fix and correctly file the return electronically. This saves time and prevents a simple mistake from holding up any refund that the taxpayer may be owed.

In response to the rejection of an electronically filed return that's missing the Form 8962, taxpayers may refile a complete return by completing and attaching Form 8962 or a written explanation of the reasons for its absence. Immediately resolving the missing Form 8962 issue at the time of filing avoids any processing delays that result when the IRS needs to correspond with the taxpayer regarding the missing form.

Previously, the IRS did not reject electronically filed returns from taxpayers who failed to reconcile their APTC by attaching Form 8962 to their return. Instead, the IRS would later correspond with the taxpayer to request the missing Form 8962 or an explanation for its absence, which delayed the processing of the return.

The IRS will continue to correspond with taxpayers who file a paper return without attaching the required Form 8962. That practice remains unchanged. The IRS may also correspond with taxpayers when more information is needed concerning the explanation for the missing Form 8962.

Taxpayers whose electronically filed return is rejected because the Form 8962 is not attached should review their health insurance records, including Form 1095-A, Health Insurance Marketplace Statement. Taxpayers who were covered by Marketplace health insurance, including those who had Marketplace insurance for less than an entire calendar year and those who terminated coverage at the end of a calendar year, still have to reconcile their APTC on Form 8962.

A1. Your electronic return was rejected because IRS records show that APTC was paid to your Marketplace health insurance company on behalf of a member of your family, and you are required to complete Form 8962 and attach it to your return to reconcile the APTC with the PTC you are allowed. For purposes of the PTC, your "family" consists of yourself, your spouse if filing jointly, and all other individuals whom you claim as dependents on your return. If someone else enrolled a member of your family in Marketplace health insurance with APTC and you claim the family member on your tax return, you are required to complete Form 8962 and attach it to your return. If another taxpayer has agreed that they will reconcile on their return all or a portion of the APTC paid on behalf of a member of your family, complete Part IV of Form 8962 and attach it to your return.

A2. You or the person who enrolled a family member in Marketplace health insurance should have received Form 1095-A, Health Insurance Marketplace Statement, from your Marketplace. The Form 1095-A shows the months of coverage and any APTC paid to your Marketplace health insurance company for the coverage.

A4. If you purchased insurance through the Federally-facilitated Marketplace , and you think the information on your Form 1095-A is incorrect, or if you think you should not have received a Form 1095-A because you were not enrolled in Marketplace health insurance, you should contact the Federally-facilitated Marketplace Call Center. If you purchased insurance through a State-based Marketplace, please contact your Marketplace Call Center, which information you can find on your State-based Marketplace website.

A5. If you think you are not required to complete Form 8962 and attach it to your return, you should confirm that APTC was not paid to your Marketplace health insurance company for any member of your family. To confirm that APTC was not paid, you should attach to your return a pdf attachment titled "ACA Explanation" with a written explanation of the reason why you believe Form 8962 should not be required. You may also upload any copies of a corrected or voided Form 1095-A from the Marketplace or any notice issued by the Marketplace indicating proof of no enrollment. You should follow the instructions provided by your software company on how to attach a pdf attachment to your return.

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The total credits allowed to an employer subject to the tax imposed by section 3301 of the Federal Unemployment Tax Act shall not exceed 5.4 percent with respect to taxable years beginning after December 31, 1984.

A State shall furnish to the Secretary of Labor such information and reports and conduct such studies as the Secretary determines are necessary or appropriate for carrying out the purposes of this part, including any additional information or data the OWS Administrator may require for the purposes of making determinations under subparts C and E of this part.

A provision of subsection (c)(2) of section 3302 of FUTA provides that, for a State that qualifies, the additional tax credit reduction applicable under subparagraph (C), beginning in the fifth consecutive year of a balance of outstanding advances, shall be waived and the additional tax credit reduction applicable under subparagraph (B) shall be substituted. The waiver and substitution are granted if the OWS Administrator determines that the State has taken no action, effective during the 12-month period ending on September 30 of the year for which the waiver and substitution are requested, which has resulted or will result in a net decrease in the solvency of the State unemployment compensation system as determined for the purposes of 606.20(a)(2) and 606.21(b).

Advances made to States pursuant to title XII of the Social Security Act shall be subject to interest payable on the due dates specified in 606.31.[1] The interest rate for each calendar year will be 10 percent or, if less, the rate determined by the Secretary of the Treasury and announced to the States by the Department.

Subsection (b)(3)(B) of section 1202 of the Social Security Act permits a State to delay payment of interest accrued on advances made during the last five months of the Federal fiscal year (May, June, July, August, and September) to no later than December 31 of the next succeeding calendar year. If the payment is delayed, interest on the delayed payment will accrue from the normal due date (i.e., September 30) and in the same manner as if the interest due on the advance(s) was an advance made on such due date. The Governor of a State which has decided to delay such interest payment shall notify the Secretary of Labor no later than September 1 of the year with respect to which the delay is applicable.

The OWS Administrator will make determinations under 606.41, 606.42, and 606.43 on or before September 10 of the taxable year, will promptly notify the applicants and the Secretary of the Treasury of such determinations, and will cause notice of such determinations to be published in the Federal Register. The OWS Administrator also will inform the Secretary of the Treasury and cause notice to be published in the Federal Register of information with respect to delayed payment of interest as provided in 606.40.

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