Abuses
State Unemployment Tax (SUTA) arbitrage, commonly referred to as "SUTA dumping," occurs when an employer with a high unemployment insurance rate transfers or "dumps" employees to purchased subsidiaries with lower unemployment insurance rates. However in any PEO relationship the client company would take the Professional Employer Organization's SUTA rate by law, in effect many times lowering their SUTA through SUTA Arbitrage, however the only time this wouldn't apply are in client reporting states.
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