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ITG FAQ #1 Answer-Are Indian tribes responsible for filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return?

As of December 21, 2000, Indian tribes are not required to file Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, if they elect to participate in the State Unemployment (SUTA) system. This law was enacted under the Consolidated Appropriations Act (CAA) for FY 2001. Prior to the CAA amendments, coverage was at the option of the state. If the entity elects not to participate in SUTA, they must file Form 940 and pay the full FUTA tax on their employees.

Services performed in the employ of tribes generally are no longer subject to the FUTA tax unless the tribal government elects not to participate in the state unemployment system. This election can be made on an entity-by-entity basis.

As a condition of participation in the federal-state unemployment compensation program, services performed in the employ of the tribes are, with specified exceptions, required to be covered under state unemployment compensation laws.

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Page Last Reviewed or Updated: 06-Dec-2016