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>> This is problem 5-7.
In April of the current year,
Stillman Press Company transferred Ken Shurm [phonetic]
from its factory in Louisiana to its plant in Florida.
The company's SUTA tax rates based
on its experience ratings are 3.2 percent in Louisiana
and 3.8 percent in Florida.
The taxable wage limits are $770 in Louisiana
and $8,500 in Florida.
And remember: it's $7,000 for the federal.
This year, Stillman Press Company paid Ken Shurm wages
of $14,190; $49.50 were paid in Louisiana,
and the remainder were paid in Florida.
So first we're computing the SUTA tax
for the Louisiana wages.
So you take the Louisiana wages of $49.50 and times them
by this rate of 3.2 percent to get $158.40.
Then the SUTA for Florida,
they have a higher limit: they have $85.
But since Ken has already paid state unemployment on $4,950
of his wages, we subtract that and then times
that by the Florida rate of .038 to get the $134.90.
So now we have to look at the FUTA.
What are they going to pay for the FUTA?
And Florida is a credit reduction state.
I've got a page number reference here for 5-11.
Basically what that means is that Florida paid
out more benefits than it had money coming in, and so it had
to borrow money from the federal government
to pay its unemployment payments.
And so it has to pay -- in essence, it's like interest
on the money that it borrowed.
And the way that it shows up is that,
instead of getting the full credit, I mean,
they have to pay some extra.
So the regular FUTA tax is $7,000 times .6 percent,
and that's $42.
But in addition, they have a rate increase of .3 percent.
So that is based on the --
it would be based on the full $7,000, except that $49.50
of that 7,000 was in Louisiana.
So since this is Florida's,
the only one that's a credit reduction state,
we're going to subtract out the Louisiana wages
and just times the Florida wages by the .003, and you get $615.
Add those two together, and that's where you come
up with the $48.15 in total FUTA taxes on Shurm.