State Unemployment Tax Identification Number (SUTA)

Businesses must register under each State’s Unemployment Tax Act (SUTA) to obtain an identification number. Unemployment taxes are paid by an employer and are added to a fund that each employee can use in case they are unemployed. This type of fee can be referred to as SUTA, unemployment tax, or unemployment insurance.

 

Every state is different in the way SUTA is applied. Depending on the state, a SUTA registration may be administered by either the state department of labor or state department of taxation.

 

Businesses must have the proper payroll tax accounts and ID’s established within a state where your business has employees. Locating the proper application to apply for the appropriate taxes can be complicated. The application process for each state’s payroll tax registration varies greatly. Some states, including California and New York, allow businesses to register for both withholding and unemployment tax using one application. The majority of states, however, require two separate applications to be submitted to separate governmental agencies in order to become properly registered as an employer.

Failing to register for unemployment insurance can lead to high fines and civil penalties.

States are especially concerned about the growing practice of SUTA dumping. This is a form of tax evasion that involves the manipulation of an employer’s unemployment insurance tax rate to achieve a lower rate.