To which agency does the employer send state unemployment insurance ( UI ) taxes?

To which agency does the employer send state unemployment insurance ( UI ) taxes?

• A. Internal Revenue Service
• B. Employment Development Department
• C. Department of Labor
• D. Social Security Administration

Answer: (B)

State unemployment insurance taxes are collected by the state's unemployment agency. In California, that agency is the Employment Development Department (EDD). Employers pay UI taxes to EDD to fund unemployment benefits for eligible workers; this is separate from federal taxes. The Internal Revenue Service handles federal unemployment tax (FUTA) and other federal payroll taxes, not state UI. The Department of Labor oversees UI programs at the federal level but does not collect state UI taxes, and the Social Security Administration handles Social Security taxes and benefits, not unemployment insurance.

State unemployment insurance taxes are collected by the state's unemployment agency. In California, that agency is the Employment Development Department (EDD). Employers pay UI taxes to EDD to fund unemployment benefits for eligible workers; this is separate from federal taxes. The Internal Revenue Service handles federal unemployment tax (FUTA) and other federal payroll taxes, not state UI. The Department of Labor oversees UI programs at the federal level but does not collect state UI taxes, and the Social Security Administration handles Social Security taxes and benefits, not unemployment insurance.