SUTA dumping is a name commonly used to describe a practice used by some companies doing business in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal district, five ma ...

to circumvent paying

unemployment insurance Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a comp ...

taxes, as mandated by the Unemployment Tax Act of 1939. The

acronym An acronym is a word or name formed from the initial components of a longer name or phrase. Acronyms are usually formed from the initial letters of words, as in '' NATO'' (''North Atlantic Treaty Organization''), but sometimes use syllables, a ...

SUTA is for "State Unemployment Tax." In all 50 states, each employer is given a variable "experience" or "unemployment insurance" rate, depending on various factors, including worker retention. Some businesses retain the same employees for years and have a low rate, but other industries, such as construction, tend to have high turnover and a corresponding higher rate. New businesses are given a new employer rate, which varies per state (

California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the ...

's, for example, is 3.4%); they stay on that rate for a few years, when they are considered "experience rated." To avoid higher tax rates, some companies get multiple account numbers with a state unemployment insurance agency and shuffle employees around to the account number with the lowest unemployment insurance rate each year. Another common scheme is to buy a business with a lower unemployment insurance rate and to shuffle employees to the other business to pay the lower tax rate. President

George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...

signed the SUTA Dumping Prevention Act on August 9, 2004 to curb the practice.

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