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Unemployment Insurance Tax (FUTA/SUTA): North Carolina

Unemployment Insurance Tax (FUTA/SUTA) requirements for other states

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

Author: Vicki M. Lambert, The Payroll Advisor

Summary

  • The common law test is used in North Carolina to determine whether a worker is an employee and is therefore covered by state unemployment insurance (SUI). See Common Law Test.
  • A new employer's UI account is initially assigned a standard tax rate set by law. After approximately two years, an employer's tax rate is determined annually based on its UI experience. North Carolina UI tax rates are determined under an experience rating system. In November of each year, active employers are mailed Form NCUI 104, Unemployment Tax Rate Assignment, showing the calculation of the tax rate for the ensuing calendar year. Experience rating accounts are maintained for rating purposes only. See Contribution Rates; Experience Rating Method.
  • North Carolina's SUTA dumping law differs from the federal model law in regard to the severity of the penalties imposed. See SUTA Dumping.
  • North Carolina law permits employers to make voluntary SUI contributions to reduce their tax rates. Joint or combined accounts are also permitted. See Voluntary Contributions; Joint or Combined Accounts.
  • If a successor employer has continuity of control with an existing business, the new employer will take over the unemployment account of the existing business. See Successor Employers.
  • Both tax and reported wages are due by the last day of the month following the end of each quarter. Penalties are imposed for late filing and payments and for failure to file or pay. North Carolina employers are also required to file quarterly multiple worksite reports, on Form BLS 3020. See Quarterly Reporting Requirements; Multiple Worksite Reporting.
  • An employer's account will not be relieved of benefit charges resulting from the employer's, or its agent's, failure to timely or adequately respond to requests for separation information. See Benefit Overpayments.
  • All North Carolina employers must maintain SUI records for each employee, including corporate officers, for at least five years. See Recordkeeping Requirements.