The Federal Unemployment Tax Act (FUTA) provides for cooperation between the federal and state governments in the establishment and administration of unemployment insurance programs. Under this dual system, the employer is subject to a payroll tax levied by the federal and state governments. The taxpayer may be allowed a maximum credit of 5.4% against the FUTA tax of 6.0% for payments made to the state. Employers whose payments are received by the state after the due date of the federal return plus extensions are allowed 90% of the credit that would have been allowed had the payments been made on time. In addition, an employer's credit will be reduced if the employer paid wages that are subject to the unemployment tax laws of a credit reduction state.

As a result of the FUTA, IRS is responsible for receiving and processing the Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and Schedule H (Form 1040), Household Employment Taxes, on which FUTA tax is reported, and for collecting FUTA tax. All FUTA tax paid and reported on these tax returns is deposited in the Unemployment Trust Fund, from which funds are dispensed to the states for administration of their unemployment compensation programs. Department of Labor (DOL) is charged with monitoring the Unemployment Compensation Systems for each state and can withhold funds from a state if the state does not comply with Federal standards.

The FUTA Certification program is the method IRS uses to verify with the states that the payment claimed on the Form 940 and/or Schedule H were actually paid into the states unemployment funds. There are currently 53 participating agencies which encompass the 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

The FCP system is used for the reconciliation of FUTA tax cases. The IRM provides instructions to the technical staff for using the FCP system which consists of various screens and windows. Cases selected for the FUTA program are worked by tax examiners who perform an in-depth analysis of each case to resolve tax cases.

The authority for the FUTA Program originates from the Federal Unemployment Tax Act (FUTA) which is contained in Title 26 of the Internal Revenue Code.

The Director, Small Business/Self Employed (SB/SE), Exam Field and Campus Policy, is responsible for the FUTA program.

Management officials are responsible for:

The FUTA program is monitored through the FCP system. The FCP system generates several different system reports for tracking cases and inventory delivery.

The following acronyms apply to this IRM.

This IRM is to be used by employees in the SB/SE Document Matching FUTA operations in conjunction with the following IRMs:

Additional resources can be found on the CAWR/FUTA website at http://wc.web.irs.gov and the CAWR FUTA Research Portal found at http://serp.enterprise.irs.gov/databases/portals.dr/compliance.dr/crc.dr/cawr_futa/cawr_futa_default.htm

When you place the cursor over File option located in the upper left hand corner and left click the mouse button a drop down will open. The functions shown are activated by either scrolling over the listed item and clicking the left mouse button or by pressing the combination of keys on the keyboard simultaneously. Figure 4.19.9-8File Option

The File drop down can be closed either by placing the cursor over the file option and left click the mouse or by placing the cursor else where in the FCP database and left clicking the mouse.

When you place the cursor over the Edit option and left click the mouse button a drop down will open. The functions shown are activated by scrolling over the listed item and clicking the left mouse button. Figure 4.19.9-9Edit Option

When the cursor is placed over the "Help Option" and clicked with the left mouse button you will see a drop down for the CAWR/FUTA web site. The web site can be accessed through FCP during your login session. The site can also be accessed via the internet explorer icon located on your workstation desktop at http://wc.web.irs.gov/. Figure 4.19.9-11Help Option.

Figure 4.19.9-11

Help OptionTitle: Help OptionSummary: This is a screen print of the help drop down option showing the CAWR/FUTA Website that can be accessed either through the Help Option drop down menu, SB/SE Website radio button or via the Internet Explorer Icon located on your workstations desktop.

Please click here for the text description of the image.

FCP has fourteen open status codes:

Below is a list of the possible closing status codes.

Figure 4.19.9-16

Open/Closing Status CodesTitle: Open/Closing Status CodesSummary: This screen print is showing the drop down menu that lists all the possible open and closing status codes. This drop down menu can be accessed in any of the screens.

Please click here for the text description of the image.

The Case Information Section contains both information input by the user and information compiled by (IDRS). The information provided in this section of the detail screen must always be considered in the processing of a case. Figure 4.19.9-18FCP Detail Screen.

Below is a list of the information available:

Figure 4.19.9-18

FCP Detail ScreenTitle: FCP Detail ScreenSummary: This is a screen print of the FCP detail screen. This is the default screen that loads when any case is first queried. Only the fields on the left side of the screen can be modified by a user.

Please click here for the text description of the image.

The Money screen provides federal wage and tax information reported to the IRS. It also includes state wages, timely and late contributions, that were processed by the certifying state(s). The FUTA program compares the amounts reported by the certifying state to determine if the proper wages/tax was reported on the Form 940, Form 1040 or Form 1041. Figure 4.19.9-19Money Screen.

The screen has six main sections:

Miscellaneous State Information: The UE (Unity of Enterprise) indicator applies to California and North Carolina cases only. See IRM 4.19.5. Value of this field is "blank" for no UE present and "9" if UE is present. FCP will set the UE indicator based on case conditions.

The State Adjusted line is where the user can make changes/corrections to any of the following fields:

State Reported line displays the following information:

Calculated Amounts fields are calculated based on the information contained in the Federal Adjusted line and State Adjusted line. An increase or decrease amount will show after calculation.

Figure 4.19.9-19

Money ScreenTitle: Money ScreenSummary: This screen contains two columns that can be modified by the user. Federal Adjusted and States Adjusted, any change in either column will trigger FCP to automatically recalculate the tax based on the changes made.

Please click here for the text description of the image.

The Adjustment Screen is used to track revenue produced by the FUTA program. Values input to this screen will create an output to the revenue tracking report.

Any changes or updates to this screen are initiated by using one of the six the functions buttons. Below is a list of the six button functions.

When a user selects "Edit Record" the Edit Case Adjustment History Screen will open. In this screen the user will be able to complete revenue values from the case in this screen.

The Correspondence Screen is used for issuing the appropriate correspondence from the FCP system. You can choose the appropriate letter using the drop down arrow. Figure 4.19.9-20 Correspondence Screen.

The correspondence screen contains the following information:

The Entity screen stores the business care of, street address, state and zip code. This information is downloaded from IDRS when the case is created. The address, state and zip code should only be modified, if a better address has been secured. When the entity screen tab is selected, the following screen appears: Figure 4.19.9-25

Figure 4.19.9-25

Entity ScreenTitle: Entity ScreenSummary: This is a screen print of the Entity Screen showing the different areas of the screen. There are three address line fields a user can change/update if needed.

Please click here for the text description of the image.

Neither of these screens contain information towards working a FUTA case. These two screens exist with the purpose of tracking upload and download data files. Examples of the types of files it tracks would be CCA uploads and case download.

The History screen gives a line by line account of all actions taken by current and previous user to a specific case.