Notice of the Federal Unemployment Tax Act (FUTA) Credit Reduction Applicable in 2018

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Sections 3302(c)(2)(A) and 3302(d)(3) of the FUTA provide that employers in a State that has outstanding advances under Title XII of the Social Security Act on January 1 of two or more consecutive years are subject to a reduction in credits otherwise available against the FUTA tax for the calendar year in which the most recent such January 1 occurs, if advances remain on November 10 of that year. Further, Section 3302(c)(2)(C) of FUTA provides for an additional credit reduction for a year if a State has outstanding advances on five or more consecutive January firsts and has a balance on November 10 for such years. Section 3302(c)(2)(C) also provides for waiver of this additional credit reduction and substitution of the credit reduction provided in Section 3302(c)(2)(B) if a state meets certain conditions. California and the United States Virgin Islands were potentially liable for the additional credit reduction under Section 3302(c)(2)(C) of FUTA and applied for the available waiver. It has been determined that each one met all of the criteria of the section necessary to qualify for the waiver of the additional credit reduction. Further, the additional credit reduction of Section 3