$**$Please note the change in amounts and year$**$

Since the SUTA rates change at the end of each year, the available $2023$ rates were used for FUTA and SUTA.

Note: For this textbook edition the rate $0\mathrm{.}6\%$ was used for the net FUTA tax rate for employers.

Example $5-10$

Alfaro Security Company is located in State H$,$ which enables employers to reduce their contribution rates under the experience$-$rating system. From $2010$ to $2019,$ inclusive, the company's total contributions to state unemployment compensation amounted to $$18,135.$ For the calendar years $2020$ to $2023,$ inclusive, the contribution rate for the Alfaro Company was $3\mathrm{.}7\%.$

The contributions of each employer are credited to an account maintained by the State Unemployment Compensation Commission. This account is credited with contributions paid into the account by the employer and is charged with unemployment benefits that are paid from the account. Starting January $1,2024,$ the contribution rate for all employers in State H will be based on the following tax rate schedule:

Reserve Ratio Contribution Rate

Contributions falling below benefits paid $7\mathrm{.}0\%$

$0\mathrm{.}0\%$ to $7\mathrm{.}9\%5\mathrm{.}5\%$

$8\mathrm{.}0\%$ to $9\mathrm{.}9\%4\mathrm{.}5\%$

$10\mathrm{.}0\%$ to $11\mathrm{.}9\%3\mathrm{.}5\%$

$12\mathrm{.}0\%$ to $14\mathrm{.}9\%2\mathrm{.}5\%$

$15\mathrm{.}0\%$ or more $1\mathrm{.}5\%$

The annual payroll for calculation purposes is the total wages payable during a $12-$month period ending with the last day of the third quarter of any calendar year. The average annual payroll is the average of the last three annual payrolls. The SUTA tax rate for the year is computed using the information available $($benefits received and taxes paid$)$ as of September $30$ of the preceding year.

The schedule below shows the total payroll and the taxable payroll for the calendar years $2020$ to $2023.$

Calendar Year

$2020202120222023$

Total Payroll Taxable Payroll Total Payroll Taxable Payroll Total Payroll Taxable Payroll Total Payroll Taxable Payroll

First Quarter $$12,000$ $$12,000$ $$11,000$ $$11,000$ $$13,000$ $$13,000$ $$10,000$ $$10,000$

Second Quarter $11,75011,75011,50011,40012,75012,7009,3009,300$

Third Quarter $12,50012,25012,75012,40012,20012,0009,3509,350$

Fourth Quarter $13,00012,50012,50012,20014,00013,750$

Unemployment benefits became payable to the company's qualified unemployed workers on January $1,2010.$ Between that time and September $30,2024,$ total benefits amounting to $$23,194\mathrm{.}15$ were charged against the employer's account. Hint: First total each year's taxable payroll. Using those numbers and SUTA rate, you can figure out how much has been paid into the reserve from $2010-2023$ and deduct benefits paid to get the balance in the reserve account as of $9/30.$ Compute rate for $2024$ by dividing balance in reserve by average of last three years payroll.

In your computations, round amounts to the nearest cent. When required, round your final percentage answers to one decimal place.

a$.$ Contribution rate for $2024.$

b$.$ Rate for $2024$ if $$2,000$ additional benefits had been charged by mistake to the account of Alfaro Security Company by the State Unemployment Compensation Commission. Hint: Compare total reserve for $9/30/19$ that you already calculated and compare it to benefits paid $($add $$2,000).$ On table, what tax rate corresponds to balance in reserve account now?