Unemployment Insurance Tax (FUTA/SUTA): Iowa

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

Authors: Stuart R. Buttrick and Tareen Zafrullah, Faegre Drinker Biddle & Reath LLP

Summary

• Iowa 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 and 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; Experience Rating Method.
• The Iowa 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.
• Iowa employers must file quarterly wage and tax reports even if no contributions are due that quarter. In addition, employers that operate more than one establishment in Iowa must file Multiple Worksite Reports. See Quarterly Reporting Requirements; Multiple Worksite Reporting.
• An employer's account may be charged for an overpayment caused by the employer's failure to properly respond to requests for information. See Benefit Overpayments.
• All employers in Iowa must maintain records for each employee for five years and keep them available for inspection by the state Department of Labor. See Recordkeeping Requirements.