Unemployment Insurance Tax (FUTA/SUTA): Maryland
Federal law and guidance on this subject should be reviewed together with this section.
Author: Vicki M. Lambert, The Payroll Advisor
- Maryland uses the ABC test to determine whether a worker is an employee for state unemployment insurance (SUI) coverage purposes. Under the test, a worker is a covered employee, unless three factors are present. See ABC Test.
- Maryland defines wages for unemployment insurance purposes as all remuneration for personal services, including commissions and bonuses and the cash value of all compensation in any medium other than cash. Not all payments are considered wages for SUI purposes. See SUI Taxable Wages; Taxable Wage Base.
- SUI tax rates are based on one of six rate schedules established by law. The tax rate for new employers is determined based on the average employer rate for the previous five years. Rates for experienced employers are based on the UI Trust Fund table in effect for the current calendar year and the employer's experience rating. See Contribution Rates; Experience Rating Method.
- Maryland law penalizes employers that knowingly withhold or provide false information regarding the transfer of their workforce or payroll from one business entity to another in order to illegally lower their tax rates See SUTA Dumping.
- Maryland does not permit employers to make voluntary contributions to lower their SUI tax rates. Government entities and nonprofits, however, are permitted to apply for a joint or combined account, under certain conditions. See Voluntary Contributions; Joint or Combined Accounts.
- Employers must file quarterly SUI reports. Penalties are imposed for noncompliance. See Quarterly Reporting Requirements.
- An employer's account will be charged for overpayments caused by the employer's failure to respond properly to requests for information about benefit claims. See Benefit Overpayments.
- Maryland employers that operate businesses from more than one location under one Unemployment Insurance Account Number are required to file Form BLS 3020, Multiple Worksite Report. See Multiple Worksite Reporting.
- Employers in Maryland are required to keep certain employment records for at least five years. See Recordkeeping Requirements.