Can an employer receive credit against the Federal Unemployment Tax for timely reports and payments to the state?

The ability for an employer to receive credit against the Federal Unemployment Tax (FUTA) for timely reports and payments to the state is indeed true. Employers who pay state unemployment taxes on time and in full can generally receive a credit of up to 5.4% against their FUTA tax liability. This is a significant benefit because it helps lower the effective rate the employer pays towards federal unemployment taxes.

To qualify for this credit, employers must ensure that they are complying with state unemployment tax requirements and that their payments and filings are completed within the specified deadlines. By maintaining good standing with the state and fulfilling these obligations, employers can maximize their tax credits and reduce their overall tax burden.

The other options do not accurately represent the established policies regarding FUTA tax credits for timely state payments. There are no specific conditions tied to audits, nor is the credit limited to only the first year of compliance. Employers can consistently receive this credit every year as long as they continue to meet the requirements set forth by the state and federal regulations.