Unemployment Insurance Tax (FUTA/SUTA): Arizona

Federal law and guidance on this subject should be reviewed together with this section.

Authors: Paige A. Martin and Mary Grace McNear, Kutak Rock LLP

Summary

• Arizona uses the common law test to determine who is an employee for state unemployment insurance (SUI) tax purposes. See Common Law Test.
• The law defines wages for SUI purposes as all compensation for personal services, including salaries, commissions, bonuses and the cash value of all compensation paid in any medium other than cash. The annual total SUI tax rate is based on a range of rates. See SUI Taxable Wages; Contribution Rates.
• Contribution rates in Arizona are determined based on the reserve ratio method of experience rating. See Experience Rating Method.
• The Arizona anti-SUTA dumping law mirrors the federal SUTA Dumping Prevention Act. Under state law, employers that knowingly attempt to manipulate businesses to get a lower tax rate are liable for serious penalties. See SUTA Dumping.
• The state permits voluntary contributions to lower SUI tax rates. See Voluntary Contributions.
• An employer that is required to make unemployment insurance contributions must file quarterly reports. In addition, employers that operate more than one establishment in Arizona may be requested to submit Multiple Worksite Reports. See Quarterly Reporting Requirements; Multiple Worksite Reporting.
• Employers will not be relieved of benefit charges for overpayments resulting from the employer's failure to timely or adequately respond to requests for information about the underlying claim. See Benefit Overpayments.
• All employers in Arizona must maintain records for each employee for four years and keep them available for inspection by the state Department of Labor. See Recordkeeping Requirements.