Number: RS22069
Title: State Unemployment Taxes and SUTA Dumping
Authors: Steven Maguire, Government and Finance Division; and Julie M. Whittaker, Domestic Social Policy Division 
Abstract: 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.
Pages: 6
Date: May 27, 2005