As you may know not all states repaid interest due to the federal government related to unemployment borrowings.  As a result the IRS has listed the states that are required to reduce their FUTA credit on Form 940 for 2011.  An employer in a credit reduction state must complete Schedule A and include it with Form 940.  Credit Reduction States

Most software packages are set up to handle this change however if you have businesses in states other than Alabama you should be aware of this additional form and additional tax that will need to be paid.

If you need assistance with your year end payroll tax filings, please contact us.