undistributed-earnings tax

See accumulated-earnings tax. A tax imposed on an employer by state or federal law to cover the cost of unemployment insurance. • The Federal Unemployment Tax Act (FUTA) provides for a tax based on a percentage of employee earnings but allows a credit for amounts paid in state unemployment taxes. [Cases: Internal Revenue 4305. C.J.S. Internal Revenue §§ 596, 606.]
[Blacks Law 8th]