Unemployment Insurance Tax (FUTA/SUTA): Pennsylvania

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

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Pennsylvania uses a modified ABC Test to determine who is an employee for state unemployment insurance (SUI) tax purposes. See ABC 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 and several additional charges. Employers and employees contribute into the unemployment system. See SUI Taxable Wages; Contribution Rates.
• The Pennsylvania anti-SUTA dumping law mirrors the federal SUTA Dumping Prevention Act to a certain extent. Under state law, employers that transfer their experience rates to other employers in an attempt to obtain lower tax rates are liable for serious penalties. See SUTA Dumping.
• The state permits employers to make voluntary contributions to improve their reserve balances for a year. See Voluntary Contributions; Joint or Combined Accounts.
• An employer that is required to make unemployment insurance contributions must file quarterly reports. Payments must be made online. See Quarterly Reporting Requirements.
• Employers that operate more than one establishment in Pennsylvania may voluntarily submit Multiple Worksite Reports. See Multiple Worksite Reporting.
• An employer's UI account will not be relieved of charges for erroneous benefit payments under certain circumstances. See Benefit Overpayments.
• All employers in Pennsylvania must maintain records for each employee for six years and keep them available for inspection by the state Department of Labor. See Recordkeeping Requirements.