Voluntary contributions are made in order to: a.decrease the employer's future SUTA payments by an amount...

Voluntary contributions are made in order to:

a.decrease the employer's future SUTA payments by an amount less than the voluntary contribution.

b.decrease the employer's future SUTA taxes by an amount more than the voluntary contribution.

c.decrease an employer's reserve account balance.

d.help the state become more solvent.

Title XII advances:

a.are used to pay administrative costs of running the federal unemployment program.

b.allow states to borrow from the federal government to pay unemployment benefits.

c.transfer cash to the unemployed while they are waiting for unemployment benefits.

d.allow the federal government to borrow from states to pay unemployment benefits.

Solutions

Expert Solution

Ans.1=

Voluntary contributions are made by the employer in order to increase the balance of employer's reserve account which will result in lower contribution rate for the future years. Hence, in future, the decrease in tax rates will help the employer to save more in state unemployment tax payments than the amount of voluntary contribution itself.

Hence,

Option (B),i.e., decrease the employer's future SUTA taxes by an amount more than the voluntary contribution is the correct answer.

Ans.2=

Title XII advances are the funds which are borrowed by the states from the federal government when they are unble to pay their unemployment compensation benefits. Generally, insolvent states borrow these advances from the federal government to meet their unemployment compensation benefit obligations.

Hence,

Option (B),i.e., allow states to borrow from the federal government to pay unemployment benefits is the correct answer.

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