Reporting and Paying the Tax FUTA tax is reported on Form 940. The form covers one calendar year, and is due January 31st of the following year. An employer may, however, be required to make deposits of the tax before filing the return. If at the end of any calendar quarter the employer owes but has not yet deposited more than $500 in FUTA tax for the year, the employer must make a deposit by the end of the following month. If the tax is $500 or less at the end of a quarter, no deposit is required. Instead, it is added to the tax for the next quarter. If the total undeposited tax is more than $500 in the next quarter, a deposit is required. These payments must be made electronically via the Electronic Federal Tax Payment System (EFTPS).
Penalties
An employer can avoid penalties and interest by making tax deposits when they are due, correct returns, and paying the proper amount of tax when due. Penalties may be imposed for filing late deposits and late filing, unless the employer can show reasonable cause for the delay. Information on penalties can be obtained from the Internal Revenue Service at the address and telephone number provided in the Resource Directory section of this Guide.
STATE UNEMPLOYMENT INSURANCE TAXES
Coverage All firms or organizations having services performed for them in Minnesota are subject to the provisions of the Minnesota Unemployment Insurance Law, and most of these firms or organizations are required to pay unemployment insurance taxes. In lieu of taxes, governmental entities and some nonprofits reimburse unemployment benefits paid to their former employees on a dollar-for-dollar basis. Whether or not a business is required to report wages and pay unemployment insurance taxes depends on the amount and type of employment, the amount of wages paid and other factors present in special situations. As discussed in “FEDERAL UNEMPLOYMENT TAXES” above, the wages paid to an owner/officer who owns 25 percent or more of a corporation or Limited Liability Company (LLC), and has not chosen to be covered under the Minnesota Unemployment Insurance Program, are not subject to Minnesota unemployment insurance tax, nor do they need to be reported on the Wage Detail Report (discussed below in “Wage Detail Reports”). Registering for a Minnesota Unemployment Insurance Employer Account All entities that pay wages to employees performing covered services in Minnesota are required to register with the Minnesota Unemployment Insurance Program. Registration is done either online or by automated phone system, and should be completed as soon as possible after wages are paid to employees performing covered services in Minnesota, but not later than the due date of the first Wage Detail Report (discussed below in “Wage Detail Reports”). Based on the information provided, the Minnesota Unemployment Insurance Program will determine if the entity is required to report the wages paid to its employees and pay Minnesota unemployment insurance taxes on those wages, or (if eligible) reimburse any unemployment benefits that are paid to the entity’s former employees. If the entity meets the reporting requirements, it will be assigned an unemployment insurance employer account number.
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