In addition to the state tax, contributing employers also pay a federal unemployment insurance tax. The Internal Revenue Service administers the federal tax. If an employer has paid the state unemployment tax, on time, then the employer will be entitled to a credit on the federal unemployment tax return. If the state tax is paid late, the credit is reduced by 10%. The net federal tax, after full credit, is 0.8%, multiplied against the first $7,000 of wages of each employee covered under the federal law.