Feds waive unemployment tax increase for NC firms
Posted November 12, 2014
Raleigh, N.C. — The U.S. Department of Labor has waived a planned increase to the federal unemployment tax rate paid by North Carolina employers, saving firms about $180 million for the 2014 tax year, Gov. Pat McCrory said Wednesday.
The tax increase was designed to help pay back money the state borrowed from the federal government to pay jobless claims during the recession. North Carolina owed more than $2.5 billion in 2012 but has since changed its unemployment program and has paid back all but $465 million of the debt.
“Restructuring North Carolina’s unemployment insurance system and aligning it with those of our neighboring states has set our unemployment program on a path to sustainability,” McCrory said in a statement. “By demonstrating to the federal government that we have cut up the federal unemployment insurance credit card, North Carolina employers will avoid paying penalties and be able to invest those funds in job creation.”
Dale Folwell, an assistant secretary with the state Department of Commerce who heads the Division of Employment Security, called the waiver "great news for the employers of North Carolina" and said the state hopes to finish paying off the debt next year.
"Once the debt is paid off, employers will begin receiving their full Federal Unemployment Tax Act credit," Folwell said. "This will be a tremendous burden lifted from the employers of this state. It will give them certainty about the cost of doing business in North Carolina. It will also encourage new businesses to come to this state, driving unemployment even lower.”