-CITE-
26 USC CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT
-HEAD-
CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT
-MISC1-
Sec.
3301. Rate of tax.
3302. Credits against tax.
3303. Conditions of additional credit allowance.
3304. Approval of State laws.
3305. Applicability of State law.
3306. Definitions.
3307. Deductions as constructive payments.
3308. Instrumentalities of the United States.
3309. State law coverage of services performed for nonprofit
organizations or governmental entities.
3310. Judicial review.
3311. Short title.
AMENDMENTS
1976 - Pub. L. 94-566, title I, Sec. 115(c)(4), Oct. 20, 1976, 90
Stat. 2671, substituted "services performed for nonprofit
organizations or governmental entities" for "certain services
performed for nonprofit organizations and for State hospitals and
institutions of higher education" in item 3309.
1970 - Pub. L. 91-373, title I, Secs. 104(b)(2), 131(b)(3), Aug.
10, 1970, 84 Stat. 699, 705, added items 3309 and 3310 and
redesignated former item 3309 as 3311.
1960 - Pub. L. 86-778, title V, Sec. 531(d)(2), Sept. 13, 1960,
74 Stat. 984, added item 3308 and redesignated former item 3308 as
3309.
-SECREF-
CHAPTER REFERRED TO IN OTHER SECTIONS
This chapter is referred to in sections 3510, 6103, 6317, 6513,
6612 of this title; title 29 sections 49d, 1302; title 42 sections
1101, 1307.
-End-
-CITE-
26 USC Sec. 3301 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT
-HEAD-
Sec. 3301. Rate of tax
-STATUTE-
There is hereby imposed on every employer (as defined in section
3306(a)) for each calendar year an excise tax, with respect to
having individuals in his employ, equal to -
(1) 6.2 percent in the case of calendar years 1988 through
2007; or
(2) 6.0 percent in the case of calendar year 2008 and each
calendar year thereafter;
of the total wages (as defined in section 3306(b)) paid by him
during the calendar year with respect to employment (as defined in
section 3306(c)).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 439; Pub. L. 86-778, title V,
Sec. 523(a), Sept. 13, 1960, 74 Stat. 980; Pub. L. 87-6, Sec.
14(a), Mar. 24, 1961, 75 Stat. 16; Pub. L. 88-31, Sec. 2(a), May
29, 1963, 77 Stat. 51; Pub. L. 91-373, title III, Sec. 301(a), Aug.
10, 1970, 84 Stat. 713; Pub. L. 92-329, Sec. 2(a), June 30, 1972,
86 Stat. 398; Pub. L. 94-455, title XIX, Sec. 1903(a)(11), Oct. 4,
1976, 90 Stat. 1808; Pub. L. 94-566, title II, Sec. 211(b), Oct.
20, 1976, 90 Stat. 2676; Pub. L. 97-248, title II, Sec. 271(b)(1),
(c)(1), Sept. 3, 1982, 96 Stat. 554, 555; Pub. L. 99-514, title
XVIII, Sec. 1899A(42), Oct. 22, 1986, 100 Stat. 2960; Pub. L.
100-203, title IX, Sec. 9153(a), Dec. 22, 1987, 101 Stat. 1330-326;
Pub. L. 101-508, title XI, Sec. 11333(a), Nov. 5, 1990, 104 Stat.
1388-470; Pub. L. 102-164, title IV, Sec. 402, Nov. 15, 1991, 105
Stat. 1061; Pub. L. 103-66, title XIII, Sec. 13751, Aug. 10, 1993,
107 Stat. 664; Pub. L. 105-34, title X, Sec. 1035, Aug. 5, 1997,
111 Stat. 937.)
-MISC1-
AMENDMENTS
1997 - Par. (1). Pub. L. 105-34, Sec. 1035(1), substituted "2007"
for "1998".
Par. (2). Pub. L. 105-34, Sec. 1035(2), substituted "2008" for
"1999".
1993 - Par. (1). Pub. L. 103-66, Sec. 13751(1), substituted
"1998" for "1996".
Par. (2). Pub. L. 103-66, Sec. 13751(2), substituted "1999" for
"1997".
1991 - Par. (1). Pub. L. 102-164, Sec. 402(1), substituted "1996"
for "1995".
Par. (2). Pub. L. 102-164, Sec. 402(2), substituted "1997" for
"1996".
1990 - Par. (1). Pub. L. 101-508, Sec. 11333(a)(1), substituted
"1988 through 1995" for "1988, 1989, and 1990".
Par. (2). Pub. L. 101-508, Sec. 11333(a)(2), substituted "1996"
for "1991".
1987 - Pars. (1), (2). Pub. L. 100-203 amended pars. (1) and (2)
generally. Prior to amendment, pars. (1) and (2) read as follows:
"(1) 6.2 percent, in the case of a calendar year beginning before
the first calendar year after 1976, as of January 1 of which there
is not a balance of repayable advances made to the extended
unemployment compensation account (established by section 905(a) of
the Social Security Act); or
"(2) 6.0 percent, in the case of such first calendar year and
each calendar year thereafter;".
1986 - Par. (1). Pub. L. 99-514 substituted "unemployment" for
"unemployed".
1982 - Par. (1). Pub. L. 97-248, Sec. 271(c)(1)(A), substituted
"6.2 percent" for "3.5 percent".
Pub. L. 97-248, Sec. 271(b)(1), substituted "3.5 percent" for
"3.4 percent".
Par. (2). Pub. L. 97-248, Sec. 271(c)(1)(B), substituted "6.0
percent" for "3.2 percent".
1976 - Pub. L. 94-566 substituted provisions imposing an excise
tax equal to 3.4 percent, in the case of a calendar year beginning
before the first calendar year after 1976, as of January 1 of which
there is not a balance of repayable advances made to the extended
unemployed compensation account (established by section 905(a) of
the Social Security Act), or 3.2 percent, in the case of such first
calendar year and each calendar year thereafter, of the total wages
(as defined in section 3306(b)) paid by him during the calendar
year with respect to employment (as defined in section 3306(c)),
for provisions imposing an excise tax for the calendar year 1970
and each calendar year thereafter, with respect to having
individuals in his employ, equal to 3.2 percent of the total wages
(as defined in section 3306(b)) paid by him during the calendar
year with respect to employment (as defined in section 3306(c)) and
provisions that, in the case of wages paid during the calendar year
1973, the rate of such tax should be 3.28 percent in lieu of 3.2
percent.
Pub. L. 94-455 substituted "each calendar year" for "the calendar
year 1970 and each calendar year thereafter" and struck out
provisions relating to the rate of tax in the case of wages paid
during the calendar year 1973.
1972 - Pub. L. 92-329 inserted provisions setting forth the rate
of tax in the case of wages paid during the calendar year 1973.
1970 - Pub. L. 91-373 increased the rate from 3.1 percent to 3.2
percent and struck out provisions setting special rates for wages
paid during 1962 and 1963.
1963 - Pub. L. 88-31 reduced the tax rate for the year 1963 from
3.5 percent to 3.35 percent.
1961 - Pub. L. 87-6 provided for a tax rate of 3.5 percent for
calendar years 1962 and 1963.
1960 - Pub. L. 86-778 substituted "1961" for "1955" and "3.1
percent" for "3 percent".
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11333(b) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section] shall apply
to wages paid after December 31, 1990."
EFFECTIVE DATE OF 1987 AMENDMENT
Section 9153(b) of Pub. L. 100-203 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to wages
paid on or after January 1, 1988."
EFFECTIVE DATE OF 1982 AMENDMENT
Section 271(d)(1), (2), formerly 271(b)(1), (2), of Pub. L.
97-248, as redesignated by Pub. L. 98-601, Sec. 1(a), Oct. 30,
1984, 98 Stat. 3147, provided that:
"(1) Subsections (a) and (b). - The amendments made by
subsections (a) and (b) [amending this section, sections 3306 and
6157 of this title, and sections 1101 and 1105 of Title 42, The
Public Health and Welfare] shall apply to remuneration paid after
December 31, 1982.
"(2) Subsection (c). - The amendments made by subsection (c)
[amending this section, sections 3302 and 6157 of this title, and
section 1101 of Title 42] shall apply to remuneration paid after
December 31, 1984."
EFFECTIVE DATE OF 1976 AMENDMENT
Section 211(d)(2) of Pub. L. 94-566 provided that: "The amendment
made by subsection (b) [amending this section] shall apply to
remuneration paid after December 31, 1976."
EFFECTIVE DATE OF 1970 AMENDMENT
Section 301(a) of Pub. L. 91-373 provided that the amendment made
by that section is effective with respect to remuneration paid
after Dec. 31, 1969.
EFFECTIVE DATE OF 1960 AMENDMENT
Section 523(c) of Pub. L. 86-778 provided that: "The amendments
made by subsection (a) [amending this section] shall apply only
with respect to the calendar year 1961 and calendar years
thereafter."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 3302, 3305, 3306, 3308,
6157 of this title; title 42 sections 1103, 12594.
-End-
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26 USC Sec. 3302 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT
-HEAD-
Sec. 3302. Credits against tax
-STATUTE-
(a) Contributions to State unemployment funds
(1) The taxpayer may, to the extent provided in this subsection
and subsection (c), credit against the tax imposed by section 3301
the amount of contributions paid by him into an unemployment fund
maintained during the taxable year under the unemployment
compensation law of a State which is certified as provided in
section 3304 for the 12-month period ending on October 31 of such
year.
(2) The credit shall be permitted against the tax for the taxable
year only for the amount of contributions paid with respect to such
taxable year.
(3) The credit against the tax for any taxable year shall be
permitted only for contributions paid on or before the last day
upon which the taxpayer is required under section 6071 to file a
return for such year; except that credit shall be permitted for
contributions paid after such last day, but such credit shall not
exceed 90 percent of the amount which would have been allowable as
credit on account of such contributions had they been paid on or
before such last day.
(4) Upon the payment of contributions into the unemployment fund
of a State which are required under the unemployment compensation
law of that State with respect to remuneration on the basis of
which, prior to such payment into the proper fund, the taxpayer
erroneously paid an amount as contributions under another
unemployment compensation law, the payment into the proper fund
shall, for purposes of credit against the tax, be deemed to have
been made at the time of the erroneous payment. If, by reason of
such other law, the taxpayer was entitled to cease paying
contributions with respect to services subject to such other law,
the payment into the proper fund shall, for purposes of credit
against the tax, be deemed to have been made on the date the return
for the taxable year was filed under section 6071.
(5) In the case of wages paid by the trustee of an estate under
title 11 of the United States Code, if the failure to pay
contributions on time was without fault by the trustee, paragraph
(3) shall be applied by substituting "100 percent" for "90
percent".
(b) Additional credit
In addition to the credit allowed under subsection (a), a
taxpayer may credit against the tax imposed by section 3301 for any
taxable year an amount, with respect to the unemployment
compensation law of each State certified as provided in section
3303 for the 12-month period ending on October 31 of such year, or
with respect to any provisions thereof so certified, equal to the
amount, if any, by which the contributions required to be paid by
him with respect to the taxable year were less than the
contributions such taxpayer would have been required to pay if
throughout the taxable year he had been subject under such State
law to the highest rate applied thereunder in such 12-month period
to any person having individuals in his employ, or to a rate of 5.4
percent, whichever rate is lower.
(c) Limit on total credits
(1) The total credits allowed to a taxpayer under this section
shall not exceed 90 percent of the tax against which such credits
are allowable.
(2) If an advance or advances have been made to the unemployment
account of a State under title XII of the Social Security Act, then
the total credits (after applying subsections (a) and (b) and
paragraph (1) of this subsection) otherwise allowable under this
section for the taxable year in the case of a taxpayer subject to
the unemployment compensation law of such State shall be reduced -
(A)(i) in the case of a taxable year beginning with the second
consecutive January 1 as of the beginning of which there is a
balance of such advances, by 5 percent of the tax imposed by
section 3301 with respect to the wages paid by such taxpayer
during such taxable year which are attributable to such State;
and
(ii) in the case of any succeeding taxable year beginning with
a consecutive January 1 as of the beginning of which there is a
balance of such advances, by an additional 5 percent, for each
such succeeding taxable year, of the tax imposed by section 3301
with respect to the wages paid by such taxpayer during such
taxable year which are attributable to such State;
(B) in the case of a taxable year beginning with the third or
fourth consecutive January 1 as of the beginning of which there
is a balance of such advances, by the amount determined by
multiplying the wages paid by such taxpayer during such taxable
year which are attributable to such State by the percentage (if
any), multiplied by a fraction, the numerator of which is the
State's average annual wage in covered employment for the
calendar year in which the determination is made and the
denominator of which is the wage base under this chapter, by
which -
(i) 2.7 percent multiplied by a fraction, the numerator of
which is the wage base under this chapter and the denominator
of which is the estimated United States average annual wage in
covered employment for the calendar year in which the
determination is to be made, exceeds
(ii) the average employer contribution rate for such State
for the calendar year preceding such taxable year; and
(C) in the case of a taxable year beginning with the fifth or
any succeeding consecutive January 1 as of the beginning of which
there is a balance of such advances, by the amount determined by
multiplying the wages paid by such taxpayer during such taxable
year which are attributable to such State by the percentage (if
any) by which -
(i) the 5-year benefit cost rate applicable to such State for
such taxable year or (if higher) 2.7 percent, exceeds
(ii) the average employer contribution rate for such State
for the calendar year preceding such taxable year.
The provisions of the preceding sentence shall not be applicable
with respect to the taxable year beginning January 1, 1975, or any
succeeding taxable year which begins before January 1, 1980; and,
for purposes of such sentence, January 1, 1980, shall be deemed to
be the first January 1 occurring after January 1, 1974, and
consecutive taxable years in the period commencing January 1, 1980,
shall be determined as if the taxable year which begins on January
1, 1980, were the taxable year immediately succeeding the taxable
year which began on January 1, 1974. Subparagraph (C) shall not
apply with respect to any taxable year to which it would otherwise
apply (but subparagraph (B) shall apply to such taxable year) if
the Secretary of Labor determines (on or before November 10 of such
taxable year) that the State meets the requirements of subsection
(f)(2)(B) for such taxable year.
(3) If the Secretary of Labor determines that a State, or State
agency, has not -
(A) entered into the agreement described in section 239 of the
Trade Act of 1974, with the Secretary of Labor before July 15,
1975, or
(B) fulfilled its commitments under an agreement with the
Secretary of Labor as described in section 239 of the Trade Act
of 1974,
then, in the case of a taxpayer subject to the unemployment
compensation law of such State, the total credits (after applying
subsections (a) and (b) and paragraphs (1) and (2) of this section)
otherwise allowable under this section for a year during which such
State or agency does not enter into or fulfill such an agreement
shall be reduced by 7 1/2 percent of the tax imposed with respect
to wages paid by such taxpayer during such year which are
attributable to such State.
(d) Definitions and special rules relating to subsection (c)
(1) Rate of tax deemed to be 6 percent
In applying subsection (c), the tax imposed by section 3301
shall be computed at the rate of 6 percent in lieu of the rate
provided by such section.
(2) Wages attributable to a particular State
For purposes of subsection (c), wages shall be attributable to
a particular State if they are subject to the unemployment
compensation law of the State, or (if not subject to the
unemployment compensation law of any State) if they are
determined (under rules or regulations prescribed by the
Secretary) to be attributable to such State.
(3) Additional taxes inapplicable where advances are repaid
before November 10 of taxable year
Paragraph (2) of subsection (c) shall not apply with respect to
any State for the taxable year if (as of the beginning of
November 10 of such year) there is no balance of advances
referred to in such paragraph.
(4) Average employer contribution rate
For purposes of subparagraphs (B) and (C) of subsection (c)(2),
the average employer contribution rate for any State for any
calendar year is that percentage obtained by dividing -
(A) the total of the contributions paid into the State
unemployment fund with respect to such calendar year, by
(B)(i) for purposes of subparagraph (B) of subsection (c)(2),
the total of the wages (as determined without any limitation on
amount) attributable to such State subject to contributions
under this chapter with respect to such calendar year, and
(ii) for purposes of subparagraph (C) of subsection (c)(2),
the total of the remuneration subject to contributions under
the State unemployment compensation law with respect to such
calendar year.
For purposes of subparagraph (C) of subsection (c)(2), if the
average employer contribution rate for any State for any calendar
year (determined without regard to this sentence) equals or
exceeds 2.7 percent, such rate shall be determined by increasing
the amount taken into account under subparagraph (A) of the
preceding sentence by the aggregate amount of employee payments
(if any) into the unemployment fund of such State with respect to
such calendar year which are to be used solely in the payment of
unemployment compensation.
(5) 5-year benefit cost rate
For purposes of subparagraph (C) of subsection (c)(2), the
5-year benefit cost rate applicable to any State for any taxable
year is that percentage obtained by dividing -
(A) one-fifth of the total of the compensation paid under the
State unemployment compensation law during the 5-year period
ending at the close of the second calendar year preceding such
taxable year, by
(B) the total of the remuneration subject to contributions
under the State unemployment compensation law with respect to
the first calendar year preceding such taxable year.
(6) Rounding
If any percentage referred to in either subparagraph (B) or (C)
of subsection (c)(2) is not a multiple of .1 percent, it shall be
rounded to the nearest multiple of .1 percent.
(7) Determination and certification of percentages
The percentage referred to in subsection (c)(2)(B) or (C) for
any taxable year for any State having a balance referred to
therein shall be determined by the Secretary of Labor, and shall
be certified by him to the Secretary of the Treasury before June
1 of such year, on the basis of a report furnished by such State
to the Secretary of Labor before May 1 of such year. Any such
State report shall be made as of the close of March 31 of the
taxable year, and shall be made on such forms, and shall contain
such information, as the Secretary of Labor deems necessary to
the performance of his duties under this section.
(e) Successor employer
Subject to the limits provided by subsection (c), if -
(1) an employer acquires during any calendar year substantially
all the property used in the trade or business of another person,
or used in a separate unit of a trade or business of such other
person, and immediately after the acquisition employs in his
trade or business one or more individuals who immediately prior
to the acquisition were employed in the trade or business of such
other person, and
(2) such other person is not an employer for the calendar year
in which the acquisition takes place,
then, for the calendar year in which the acquisition takes place,
in addition to the credits allowed under subsections (a) and (b),
such employer may credit against the tax imposed by section 3301
for such year an amount equal to the credits which (without regard
to subsection (c)) would have been allowable to such other person
under subsections (a) and (b) and this subsection for such year, if
such other person had been an employer, with respect to
remuneration subject to contributions under the unemployment
compensation law of a State paid by such other person to the
individual or individuals described in paragraph (1).
(f) Limitation on credit reduction
(1) Limitation
In the case of any State which meets the requirements of
paragraph (2) with respect to any taxable year the reduction
under subsection (c)(2) in credits otherwise applicable to
taxpayers subject to the unemployment compensation law of such
State shall not exceed the greater of -
(A) the reduction which was in effect with respect to such
State under subsection (c)(2) for the preceding taxable year,
or
(B) 0.6 percent of the wages paid by the taxpayer during such
taxable year which are attributable to such State.
(2) Requirements
The requirements of this paragraph are met by any State with
respect to any taxable year if the Secretary of Labor determines
(on or before November 10 of such taxable year) that -
(A) no State action was taken during the 12-month period
ending on September 30 of such taxable year (excluding any
action required under State law as in effect prior to the date
of the enactment of this subsection) which has resulted or will
result in a reduction in such State's unemployment tax effort
(as defined by the Secretary of Labor in regulations),
(B) no State action was taken during the 12-month period
ending on September 30 of such taxable year (excluding any
action required under State law as in effect prior to the date
of the enactment of this subsection) which has resulted or will
result in a net decrease in the solvency of the State
unemployment compensation system (as defined by the Secretary
of Labor in regulations),
(C) the State unemployment tax rate for the taxable year
equals or exceeds the average benefit cost ratio for calendar
years in the 5-calendar year period ending with the last
calendar year before the taxable year, and
(D) the outstanding balance for such State of advances under
title XII of the Social Security Act on September 30 of such
taxable year was not greater than the outstanding balance for
such State of such advances on September 30 of the third
preceding taxable year (or, for purposes of applying this
subparagraph to taxable year 1983, September 30, 1981).
The requirements of subparagraphs (C) and (D) shall not apply to
taxable years 1981 and 1982.
(3) Credit reductions for subsequent years
If the credit reduction under subsection (c)(2) is limited by
reason of paragraph (1) of this subsection for any taxable year,
for purposes of applying subsection (c)(2) to subsequent taxable
years (including years after 1987), the taxable year for which
the credit reduction was so limited (and January 1 thereof) shall
not be taken into account.
(4) State unemployment tax rate
For purposes of this subsection -
(A) In general
The State unemployment tax rate for any taxable year is the
percentage obtained by dividing -
(i) the total amount of contributions paid into the State
unemployment fund with respect to such taxable year, by
(ii) the total amount of the remuneration subject to
contributions under the State unemployment compensation law
with respect to such taxable year (determined without regard
to any limitation on the amount of wages subject to
contribution under the State law).
(B) Treatment of additional tax under this chapter
(i) Taxable year 1983
In the case of taxable year 1983, any additional tax
imposed under this chapter with respect to any State by
reason of subsection (c)(2) shall be treated as contributions
paid into the State unemployment fund with respect to such
taxable year.
(ii) Taxable year 1984
In the case of taxable year 1984, any additional tax
imposed under this chapter with respect to any State by
reason of subsection (c)(2) shall (to the extent such
additional tax is attributable to a credit reduction in
excess of 0.6 of wages attributable to such State) be treated
as contributions paid into the State unemployment fund with
respect to such taxable year.
(5) Benefit cost ratio
For purposes of this subsection -
(A) In general
The benefit cost ratio for any calendar year is the
percentage determined by dividing -
(i) the sum of the total of the compensation paid under the
State unemployment compensation law during such calendar year
and any interest paid during such calendar year on advances
made to the State under title XII of the Social Security Act,
by
(ii) the total amount of the remuneration subject to
contributions under the State unemployment compensation law
with respect to such calendar year (determined without regard
to any limitation on the amount of remuneration subject to
contribution under the State law).
(B) Reimbursable benefits not taken into account
For purposes of subparagraph (A), compensation shall not be
taken into account to the extent -
(i) the State is entitled to reimbursement for such
compensation under the provisions of any Federal law, or
(ii) such compensation is attributable to services
performed for a reimbursing employer.
(C) Reimbursing employer
The term "reimbursing employer" means any governmental entity
or other organization (or group of governmental entities or any
other organizations) which makes reimbursements in lieu of
contributions to the State unemployment fund.
(D) Special rules for years before 1985
(i) Taxable year 1983
For purposes of determining whether a State meets the
requirements of paragraph (2)(C) for taxable year 1983, only
regular compensation (as defined in section 205 of the
Federal-State Extended Unemployment Compensation Act of 1970)
shall be taken into account for purposes of determining the
benefit ratio for any preceding calendar year before 1982.
(ii) Taxable year 1984
For purposes of determining whether a State meets the
requirements of paragraph (2)(C) for taxable year 1984, only
regular compensation (as so defined) shall be taken into
account for purposes of determining the benefit ratio for any
preceding calendar year before 1981.
(E) Rounding
If any percentage determined under subparagraph (A) is not a
multiple of .1 percent, such percentage shall be reduced to the
nearest multiple of .1 percent.
(6) Reports
The Secretary of Labor may, by regulations, require a State to
furnish such information at such time and in such manner as may
be necessary for purposes of this subsection.
(7) Definitions and special rules
The definitions and special rules set forth in subsection (d)
shall apply to this subsection in the same manner as they apply
to subsection (c).
(8) Partial limitation
(A) In the case of a State which would meet the requirements of
this subsection for a taxable year prior to 1986 but for its
failure to meet one of the requirements contained in subparagraph
(C) or (D) of paragraph (2), the reduction under subsection
(c)(2) in credits otherwise applicable to taxpayers in such State
for such taxable year and each subsequent year (in a period of
consecutive years for each of which a credit reduction is in
effect for taxpayers in such State) shall be reduced by 0.1
percentage point.
(B) In the case of a State which does not meet the requirements
of paragraph (2) but meets the requirements of subparagraphs (A)
and (B) of paragraph (2) and which also meets the requirements of
section 1202(b)(8)(B) of the Social Security Act with respect to
such taxable year, the reduction under subsection (c)(2) in
credits otherwise applicable to taxpayers in such State for such
taxable year and each subsequent year (in a period of consecutive
years for each of which a credit reduction is in effect for
taxpayers in such State) shall be further reduced by an
additional 0.1 percentage point.
(C) In no case shall the application of subparagraphs (A) and
(B) reduce the credit reduction otherwise applicable under
subsection (c)(2) below the limitation under paragraph (1).
(g) Credit reduction not to apply when State makes certain
repayments
(1) In general
In the case of any State which meets requirements of paragraph
(2) with respect to any taxable year, subsection (c)(2) shall not
apply to such taxable year; except that such taxable year (and
January 1 of such taxable year) shall (except as provided in
subsection (f)(3)) be taken into account for purposes of applying
subsection (c)(2) to succeeding taxable years.
(2) Requirements
The requirements of this paragraph are met by any State with
respect to any taxable year if the Secretary of Labor determines
that -
(A) the repayments during the 1-year period ending on
November 9 of such taxable year made by such State of advances
under title XII of the Social Security Act are not less than
the sum of -
(i) the potential additional taxes for such taxable year,
and
(ii) any advances made to such State during such 1-year
period under such title XII,
(B) there will be sufficient amounts in the State
unemployment fund to pay all compensation during the 3-month
period beginning on November 1 of such taxable year without
receiving any advance under title XII of the Social Security
Act, and
(C) there is a net increase in the solvency of the State
unemployment compensation system for the taxable year
attributable to changes made in the State law after the date on
which the first advance taken into account in determining the
amount of the potential additional taxes was made (or, if
later, after the date of the enactment of this subsection) and
such net increase equals or exceeds the potential additional
taxes for such taxable year.
(3) Definitions
For purposes of paragraph (2) -
(A) Potential additional taxes
The term "potential additional taxes" means, with respect to
any State for any taxable year, the aggregate amount of the
additional tax which would be payable under this chapter for
such taxable year by all taxpayers subject to the unemployment
compensation law of such State for such taxable year if
paragraph (2) of subsection (c) had applied to such taxable
year and any preceding taxable year without regard to this
subsection but with regard to subsection (f).
(B) Treatment of certain reductions
Any reduction in the State's balance under section 901(d)(1)
of the Social Security Act shall not be treated as a repayment
made by such State.
(4) Reports
The Secretary of Labor may require a State to furnish such
information at such time and in such manner as may be necessary
for purposes of paragraph (2).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 439; Pub. L. 86-778, title V,
Sec. 523(b), Sept. 13, 1960, 74 Stat. 980; Pub. L. 87-6, Sec.
14(b), Mar. 24, 1961, 75 Stat. 16; Pub. L. 87-321, Sec. 1(a), Sept.
26, 1961, 75 Stat. 683; Pub. L. 88-31, Sec. 2(b), May 29, 1963, 77
Stat. 51; Pub. L. 88-173, Sec. 1(a)-(c), Nov. 7, 1963, 77 Stat.
305; Pub. L. 91-373, title I, Sec. 142(a), (b), Aug. 10, 1970, 84
Stat. 707; Pub. L. 93-618, title II, Sec. 239(e), Jan. 3, 1975, 88
Stat. 2025; Pub. L. 94-45, title I, Sec. 110(a), title III, Sec.
302, June 30, 1975, 89 Stat. 239, 243; Pub. L. 94-455, title XIX,
Secs. 1903(a)(12), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1808,
1834; Pub. L. 95-19, title II, Sec. 201(a), Apr. 12, 1977, 91 Stat.
43; Pub. L. 96-589, Sec. 6(f), Dec. 24, 1980, 94 Stat. 3409; Pub.
L. 97-35, title XXIV, Sec. 2406(a), Aug. 13, 1981, 95 Stat. 876;
Pub. L. 97-248, title II, Secs. 271(c)(2), (3)(A), (B), 272(a),
273(a), Sept. 3, 1982, 96 Stat. 555-557; Pub. L. 98-21, title V,
Secs. 512(a)(1), (b), 513(a)-(c), Apr. 20, 1983, 97 Stat. 146, 147;
Pub. L. 99-514, title XVIII, Sec. 1884(1), (2), Oct. 22, 1986, 100
Stat. 2919.)
-REFTEXT-
REFERENCES IN TEXT
The Social Security Act, referred to in subsecs. (c)(2),
(f)(2)(D), (5)(A)(i), (8)(B), and (g)(2)(A), (B), (3)(B), is act
Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Title XII of the
Social Security Act is classified generally to subchapter XII (Sec.
1321 et seq.) of chapter 7 of Title 42, The Public Health and
Welfare. Sections 901(d)(1) and 1202(b)(8)(B) of the Social
Security Act are classified to sections 1101(d)(1) and
1322(b)(8)(B), respectively, of Title 42. For complete
classification of this act to the Code, see section 1305 of Title
42 and Tables.
Section 239 of the Trade Act of 1974, referred to in subsec.
(c)(3)(A), (B), is classified to subsec. (c)(3) of this section and
to section 2311 of Title 19, Customs Duties.
The date of the enactment of this subsection, referred to in
subsec. (f)(2)(A), (B), means the date of the enactment of Pub. L.
97-35 which was approved Aug. 13, 1981.
Section 205 of the Federal-State Extended Unemployment
Compensation Act of 1970, referred to in subsec. (f)(5)(D)(i), is
section 205 of Pub. L. 91-373, title II, Aug. 10, 1970, 84 Stat.
708, which is set out as a note under section 3304 of this title.
The date of the enactment of this subsection, referred to in
subsec. (g)(2)(C), means the date of the enactment of Pub. L.
97-248, which was approved Sept. 3, 1982.
-MISC1-
AMENDMENTS
1986 - Subsec. (c)(2)(B). Pub. L. 99-514, Sec. 1884(1),
substituted "denominator" for second reference to "determination",
and in cl. (i) inserted "percent" after "2.7" and struck out
"percent" after "is to be made".
Subsec. (f)(8)(A). Pub. L. 99-514, Sec. 1884(2), substituted
"1986" for "1987".
1983 - Subsec. (c)(2)(B). Pub. L. 98-21, Sec. 513(c), inserted ",
multiplied by a fraction, the numerator of which is the State's
average annual wage in covered employment for the calendar year in
which the determination is made and the determination of which is
the wage base under this chapter," in provisions preceding cl. (i).
Subsec. (c)(2)(B)(i). Pub. L. 98-21, Sec. 513(b), inserted
"multiplied by a fraction, the numerator of which is the wage base
under this chapter and the denominator of which is the estimated
United States average annual wage in covered employment for the
calendar year in which the determination is to be made" after
"2.7".
Subsec. (d)(4)(B). Pub. L. 98-21, Sec. 513(a), amended subpar.
(B) generally, adding cl. (i), designating existing provisions as
cl. (ii), and inserting reference to purposes of subsec. (c)(2)(C).
Subsec. (f)(1). Pub. L. 98-21, Sec. 512(b), struck out "beginning
before January 1, 1988," after "any taxable year".
Subsec. (f)(8). Pub. L. 98-21, Sec. 512(a)(1), added par. (8).
1982 - Subsec. (b). Pub. L. 97-248, Sec. 271(c)(2)(A),
substituted "5.4 percent" for "2.7 percent".
Subsec. (c)(2). Pub. L. 97-248, Sec. 273(a), inserted provision
at end that subpar. (C) shall not apply with respect to any taxable
year to which it would otherwise apply (but that subpar. (B) would
apply to such taxable year) if the Secretary of Labor determines
(on or before Nov. 10 of such taxable year) that the State meets
the requirements of subsec. (f)(2)(B) of this section for such
taxable year.
Subsec. (c)(2)(A). Pub. L. 97-248, Sec. 271(c)(3)(A), substituted
"5 percent" for "10 percent" in two places.
Subsec. (c)(3). Pub. L. 97-248, Sec. 271(c)(3)(B), substituted "7
1/2 percent" for "15 percent" in provisions following subpar. (B).
Subsec. (d)(1). Pub. L. 97-248, Sec. 271(c)(2)(B), substituted "6
percent" for "3 percent" in par. heading and text.
Subsec. (g). Pub. L. 97-248, Sec. 272(a), added subsec. (g).
1981 - Subsec. (f). Pub. L. 97-35 added subsec. (f).
1980 - Subsec. (a)(5). Pub. L. 96-589 added par. (5).
1977 - Subsec. (c)(2). Pub. L. 95-19 substituted "January 1,
1980" for "January 1, 1978" wherever appearing.
1976 - Subsec. (a)(1). Pub. L. 94-455, Sec. 1903(a)(12)(A),
struck out "(10-month period in the case of October 31, 1972)"
after "ending on October 31 of such year".
Subsec. (b). Pub. L. 94-455, Sec. 1903(a)(12)(B), struck out
"(10-month period in the case of October 31, 1972)" after "ending
on October 31, of such year" and substituted "12-month period" for
"12 or 10-month period, as the case may be,".
Subsec. (c)(2). Pub. L. 94-455, Sec. 1903(a)(12)(C)(i), (ii),
redesignated par. (3) as (2), struck out "on or after the date of
the enactment of the Employment Security Act of 1960" after "title
XII of the Social Security Act", and substituted "paragraph (1)"
for "paragraphs (1) and (2). Former par. (2), which related to the
computation of the reduction of the total credits allowable to a
taxpayer with respect to advances made to the unemployment account,
was struck out.
Subsec. (c)(3), (4). Pub. L. 94-455, Sec. 1903(a)(12)(C)(i),
(iii), redesignated par. (4) as (3) and substituted "paragraphs (1)
and (2)" for "paragraphs (1), (2), and (3)". Former par. (3)
redesignated (2).
Subsec. (d)(2). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
"or his delegate" after "Secretary".
Subsec. (d)(3). Pub. L. 94-455, Sec. 1903(a)(12)(C)(iv), struck
out "or (3)" after "Paragraph (2)".
Subsec. (d)(4) to (6). Pub. L. 94-455, Sec. 1903(a)(12(C)(v),
substituted "subsection (c)(2)" for "subsection (c)(3)".
Subsec. (d)(7). Pub. L. 94-455, Sec. 1903(a)(12)(C)(vi),
substituted "subsection (c)(2)(B) or (C)" for "subsection (c)(3)(B)
or (C)".
Subsec. (d)(8). Pub. L. 94-455, Sec. 1903(a)(12)(D), struck out
par. (8) which provided for a cross reference to section 104 of the
Temporary Unemployment Compensation Act of 1958 relating to the
reduction of total credits allowable under subsec. (c) of this
section.
1975 - Subsec. (c)(3). Pub. L. 94-45, Sec. 110(a), provided that
par. (3) shall not be applicable with respect to the taxable year
beginning Jan. 1, 1975, or any succeeding taxable year which begins
before Jan. 1, 1978, and that, for the purposes of par. (3), Jan.
1, 1978, shall be deemed to be the first Jan. 1 occurring after
Jan. 1, 1974, and consecutive taxable years in the period
commencing Jan. 1, 1978, shall be determined as if the taxable year
which begins Jan. 1, 1978, were the taxable year immediately
succeeding the taxable year which began on Jan. 1, 1974.
Subsec. (c)(4). Pub. L. 94-45, Sec. 302, substituted "July 15,
1975" for "July 1, 1975".
Pub. L. 93-618 added par. (4).
1970 - Subsec. (a)(1). Pub. L. 91-373, Sec. 142(a), substituted
"certified as provided in section 3304 for the 12-month period
ending on October 31 of such year (10-month period in the case of
October 31, 1972)" for "certified for the taxable year as provided
in section 3304".
Subsec. (b). Pub. L. 91-373, Sec. 142(b), changed the
certification date from December 31 to October 31, with a provision
for a 10-month period in the case of October 31, 1972, and provided
for certification based on a 12-month period ending each October
31.
1963 - Subsec. (c). Pub. L. 88-173, in cl. (2), substituted "on
January 1, 1963 (and in the case of any succeeding taxable year
beginning before January 1, 1968)," for "with the fourth
consecutive January 1", in subpar. (A), and "on or after January 1,
1968," for "with a consecutive January 1", in subpar. (B), and
inserted paragraph following subpar. (B).
Subsec. (d)(1). Pub. L. 88-31 substituted "the rate provided by
such section" for "3.1 percent (or, in the case of the tax imposed
with respect to the calendar years 1962 and 1963, in lieu of 3.5
percent)".
1961 - Subsec. (d)(1). Pub. L. 87-6 provided for computation of
the tax at the rate of 3 percent in lieu of 3.5 percent for
calendar years 1962 and 1968.
Subsec. (e). Pub. L. 87-321 added subsec. (e).
1960 - Subsec. (c). Pub. L. 86-778 restricted cl. (2) to advances
made before the date of the enactment of the Employment Security
Act of 1960, added cl. (3), and struck out provisions which related
to the attributing of wages to a particular State, which provisions
are now covered by subsec. (d)(2).
Subsec. (d). Pub. L. 86-778 added subsec. (d).
EFFECTIVE DATE OF 1983 AMENDMENT
Section 512(a)(2) of Pub. L. 98-21 provided that: "The amendment
made by paragraph (1) [amending this section] shall apply with
respect to taxable year 1983 and taxable years thereafter."
Section 513(d) of Pub. L. 98-21 provided that: "The amendments
made by this section [amending this section] shall be effective for
taxable year 1983 and taxable years thereafter."
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by section 271(c)(2), (3)(A), (B) of Pub. L. 97-248
applicable to remuneration paid after Dec. 31, 1984, see section
271(d)(2) of Pub. L. 97-248, as amended, set out as a note under
section 3301 of this title.
Section 272(b) of Pub. L. 97-248 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1982."
Section 273(b) of Pub. L. 97-248 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1982."
EFFECTIVE DATE OF 1981 AMENDMENT
Section 2406(b) of Pub. L. 97-35 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1980."
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-589 effective Oct. 1, 1979, but not to
apply to proceedings under Title 11, Bankruptcy, commenced before
Oct. 1, 1979, see section 7(e) of Pub. L. 96-589, set out as a note
under section 108 of this title.
EFFECTIVE DATE OF 1970 AMENDMENT
Section 142(i) of Pub. L. 91-373 provided that: "The amendments
made by this section [amending this section and sections 3303 and
3304 of this title] shall apply with respect to the taxable year
1972 and taxable years thereafter."
EFFECTIVE DATE OF 1963 AMENDMENT
Section 1(d) of Pub. L. 88-173 provided that: "The amendments
made by subsections (a), (b), and (c) of this section [amending
this section] shall apply only with respect to taxable years
beginning on or after January 1, 1963."
EFFECTIVE DATE OF 1961 AMENDMENT
Section 1(b) of Pub. L. 87-321 provided that: "The amendment made
by subsection (a) [amending this section] shall apply with respect
to the calendar year 1961 and each calendar year thereafter."
EXTENSION OF PERIOD FOR REPAYMENT OF FEDERAL LOANS TO STATE
UNEMPLOYMENT FUNDS
Pub. L. 102-318, title III, Sec. 304, July 3, 1992, 106 Stat.
298, provided that:
"(a) General Rule. - If the Secretary of Labor determines that a
State meets the requirements of subsection (b), paragraph (2) of
section 3302(c) of the Internal Revenue Code of 1986 shall be
applied with respect to such State for taxable years after 1991 -
"(1) by substituting 'third' for 'second' in subparagraph
(A)(i),
"(2) by substituting 'fourth or fifth' for 'third or fourth' in
subparagraph (B), and
"(3) by substituting 'sixth' for 'fifth' in subparagraph (C).
"(b) Requirements. - A State meets the requirements of this
subsection if, during calendar year 1992 or 1993, the State amended
its unemployment compensation law to increase estimated
contributions required under such law by at least 25 percent.
"(c) Special Rule. - This section shall not apply to any taxable
year after 1994 unless -
"(1) such taxable year is in a series of consecutive taxable
years as of the beginning of each of which there was a balance
referred to in section 3302(c)(2) of such Code, and
"(2) such series includes a taxable year beginning in 1992,
1993, or 1994."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
TRANSITIONAL RULE FOR CERTAIN EMPLOYEES AND SMALL BUSINESSES
Section 271(d)(3), (4), formerly 271(b)(3), of Pub. L. 97-248, as
redesignated and amended by Pub. L. 98-601, Sec. 1(a), Oct. 30,
1984, 98 Stat. 3147; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100
Stat. 2095, provided that:
"(3) Transitional rule for certain employees. -
"(A) In general. - Notwithstanding section 3303 of the Internal
Revenue Code of 1986 [formerly I.R.C. 1954], in the case of
taxable years beginning after December 31, 1984, and before
January 1, 1989, a taxpayer shall be allowed the additional
credit under section 3302(b) of such Code with respect to any
employee covered by a qualified specific industry provision if
the requirements of subparagraph (B) are met with respect to such
employee.
"(B) Requirements. - The requirements of this subparagraph are
met for any taxable year with respect to any employee covered by
a specific industry provision if the amount of contributions
required to be paid for the taxable year to the unemployment fund
of the State with respect to such employee are not less than the
product of the required rate multiplied by the wages paid by the
employer during the taxable year.
"(C) Required rate. - For purposes of subparagraph (B), the
required rate for any taxable year is the sum of -
"(i) the rate at which contributions were required to be made
under the specific industry provision as in effect on August
10, 1982, and
"(ii) the applicable percentage of the excess of 5.4 percent
over the rate described in clause (i).
"(D) Applicable percentage. - For purposes of subparagraph (C),
the term 'applicable percentage' means -
"(i) 20 percent in the case of taxable year 1985,
"(ii) 40 percent in the case of taxable year 1986,
"(iii) 60 percent in the case of taxable year 1987, and
"(iv) 80 percent in the case of taxable year 1988.
"(E) Qualified specific industry provision. - For purposes of
this paragraph, the term, 'qualified specific industry provision'
means a provision contained in a State unemployment compensation
law (as in effect on August 10, 1982) -
"(i) which applies to employees in a specific industry or to
an otherwise defined type of employees, and
"(ii) under which employers may elect to make contributions
at a specified rate (without experience rating) which exceeds
2.7 percent.
"(4) Transitional rule for certain small businesses. -
"(A) In general. - Notwithstanding section 3303 of the Internal
Revenue Code of 1986, in the case of taxable years beginning
after December 31, 1984, and before January 1, 1989, a taxpayer
shall be allowed the additional credit under section 3302(b) of
such Code with respect to any employee covered by a qualified
small business provision if the requirements of subparagraph (B)
are met with respect to such employee.
"(B) Requirements. - The requirements of this subparagraph are
met for any taxable year with respect to any employee covered by
a qualified small business provision if the amount of
contributions required to be paid for the taxable year to the
unemployment fund of the State with respect to such employee are
not less than the product of the required rate multiplied by the
wages paid by the employer during the taxable year.
"(C) Required rate. - For purposes of subparagraph (B), the
required rate for any taxable year is the sum of -
"(i) 3.1 percent, plus
"(ii) the applicable percentage (as defined in paragraph
(3)(D)) of the excess of 5.4 percent over the rate described in
clause (i).
"(D) Qualified small business provision. - For purposes of this
paragraph, the term 'qualified small business provision' means a
provision contained in a State unemployment compensation law (as
in effect on the date of the enactment of this paragraph [Oct.
30, 1984]) which provides a maximum rate at which an employer is
subject to contribution for wages paid during a calendar quarter
if the total wages paid by such employer during such calendar
quarter are less than $50,000.
"(E) Definition. - For purposes of this paragraph, the term
'wages' means the remuneration subject to contributions under the
State unemployment compensation law, except that for purposes of
subparagraph (D) the amount of total wages paid by an employer
shall be determined without regard to any limitation on the
amount subject to contribution."
[Section 1(b) of Pub. L. 98-601 provided that: "The amendment
made by subsection (a) [amending section 271(d) of Pub. L. 97-248,
set out above] shall apply to remuneration paid after December 31,
1984."]
FINDINGS OF SECRETARY OF LABOR CONCERNING STEPS TAKEN BY STATES AS
PREREQUISITE TO SUSPENSION UNTIL JANUARY 1, 1980, OF AUTOMATIC
INCREASES IN FEDERAL UNEMPLOYMENT TAX
Section 201(b) of Pub. L. 95-19 provided that extension under
section 201(a) of Pub. L. 95-19 (amending this section) from Jan.
1, 1978, to Jan. 1, 1980, not to apply to any State unless the
Secretary of Labor finds that such State meets the requirement of
section 110(b) of Emergency Compensation and Special Unemployment
Assistance Extension Act of 1975.
FISCAL SOUNDNESS OF STATE UNEMPLOYMENT ACCOUNT IN UNEMPLOYMENT
TRUST FUND; UNPAID LOANS TO STATES; FINDINGS OF SECRETARY OF LABOR
CONCERNING STEPS TAKEN BY STATES AS PREREQUISITE TO 1975-1977
SUSPENSION OF AUTOMATIC INCREASES IN FEDERAL UNEMPLOYMENT TAX
Section 110(b) of Pub. L. 94-45 provided that:
"(1) The amendment made by subsection (a) [amending this section]
shall not be applicable in the case of any State unless the
Secretary of Labor finds that such State has studied and taken
appropriate action with respect to the financing of its
unemployment programs so as substantially to accomplish the purpose
of restoring the fiscal soundness of the State's unemployment
account in the Unemployment Trust Fund and permitting the repayment
within a reasonable time of any advances made to such account under
title XII of the Social Security Act [section 1321 et seq. of Title
42, The Public Health and Welfare]. For purposes of the preceding
sentence, appropriate action with respect to the financing of a
State's unemployment programs means an increase in the State's
unemployment tax rate, an increase in the State's unemployment tax
base, a change in the experience rating formulas, or a combination
thereof.
"(2) The Secretary of Labor shall promptly prescribe and publish
in the Federal Register regulations setting forth the criteria
according to which he will determine the requirements of the
preceding paragraph.
"(3) Immediately after he makes a determination with respect to
any State under paragraph (1), the Secretary of Labor shall publish
such determination, together with his reasons therefor, in the
Federal Register."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 3303, 3304, 3305, 3306 of
this title; title 42 sections 1101, 1322.
-End-
-CITE-
26 USC Sec. 3303 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT
-HEAD-
Sec. 3303. Conditions of additional credit allowance
-STATUTE-
(a) State standards
A taxpayer shall be allowed an additional credit under section
3302(b) with respect to any reduced rate of contributions permitted
by a State law, only if the Secretary of Labor finds that under
such law -
(1) no reduced rate of contributions to a pooled fund or to a
partially pooled account is permitted to a person (or group of
persons) having individuals in his (or their) employ except on
the basis of his (or their) experience with respect to
unemployment or other factors bearing a direct relation to
unemployment risk during not less than the 3 consecutive years
immediately preceding the computation date;
(2) no reduced rate of contributions to a guaranteed employment
account is permitted to a person (or a group of persons) having
individuals in his (or their) employ unless -
(A) the guaranty of remuneration was fulfilled in the year
preceding the computation date; and
(B) the balance of such account amounts to not less than 2
1/2 percent of that part of the payroll or payrolls for the 3
years preceding the computation date by which contributions to
such account were measured; and
(C) such contributions were payable to such account with
respect to 3 years preceding the computation date;
(3) no reduced rate of contributions to a reserve account is
permitted to a person (or group of persons) having individuals in
his (or their) employ unless -
(A) compensation has been payable from such account
throughout the year preceding the computation date, and
(B) the balance of such account amounts to not less than five
times the largest amount of compensation paid from such account
within any 1 of the 3 years preceding such date, and
(C) the balance of such account amounts to not less than 2
1/2 percent of that part of the payroll or payrolls for the 3
years preceding such date by which contributions to such
account were measured, and
(D) such contributions were payable to such account with
respect to the 3 years preceding the computation date.
For any person (or group of persons) who has (or have) not been
subject to the State law for a period of time sufficient to compute
the reduced rates permitted by paragraphs (1), (2), and (3) of this
subsection on a 3-year basis (i) the period of time required may be
reduced to the amount of time the person (or group of persons) has
(or have) had experience under or has (or have) been subject to the
State law, whichever is appropriate, but in no case less than 1
year immediately preceding the computation date, or (ii) a reduced
rate (not less than 1 percent) may be permitted by the State law on
a reasonable basis other than as permitted by paragraph (1), (2),
or (3).
(b) Certification by the Secretary of Labor with respect to
additional credit allowance
(1) On October 31 of each calendar year, the Secretary of Labor
shall certify to the Secretary of the Treasury the law of each
State (certified by the Secretary of Labor as provided in section
3304 for the 12-month period ending on such October 31), with
respect to which he finds that reduced rates of contributions were
allowable with respect to such 12-month period only in accordance
with the provisions of subsection (a).
(2) If the Secretary of Labor finds that under the law of a
single State (certified by the Secretary of Labor as provided in
section 3304) more than one type of fund or account is maintained,
and reduced rates of contributions to more than one type of fund or
account were allowable with respect to any 12-month period ending
on October 31, and one or more of such reduced rates were allowable
under conditions not fulfilling the requirements of subsection (a),
the Secretary of Labor shall, on such October 31, certify to the
Secretary of the Treasury only those provisions of the State law
pursuant to which reduced rates of contributions were allowable
with respect to such 12-month period under conditions fulfilling
the requirements of subsection (a), and shall, in connection
therewith, designate the kind of fund or account, as defined in
subsection (c), established by the provisions so certified. If the
Secretary of Labor finds that a part of any reduced rate of
contributions payable under such law or under such provisions is
required to be paid into one fund or account and a part into
another fund or account, the Secretary of Labor shall make such
certification pursuant to this paragraph as he finds will assure
the allowance of additional credits only with respect to that part
of the reduced rate of contributions which is allowed under
provisions which do fulfill the requirements of subsection (a).
(3) The Secretary of Labor shall, within 30 days after any State
law is submitted to him for such purpose, certify to the State
agency his findings with respect to reduced rates of contributions
to a type of fund or account, as defined in subsection (c), which
are allowable under such State law only in accordance with the
provisions of subsection (a). After making such findings, the
Secretary of Labor shall not withhold his certification to the
Secretary of the Treasury of such State law, or of the provisions
thereof with respect to which such findings were made, for any
12-month period ending on October 31 pursuant to paragraph (1) or
(2) unless, after reasonable notice and opportunity for hearing to
the State agency, the Secretary of Labor finds the State law no
longer contains the provisions specified in subsection (a) or the
State has, with respect to such 12-month period, failed to comply
substantially with any such provision.
(c) Definitions
As used in this section -
(1) Reserve account
The term "reserve account" means a separate account in an
unemployment fund, maintained with respect to a person (or group
of persons) having individuals in his (or their) employ, from
which account, unless such account is exhausted, is paid all and
only compensation payable on the basis of services performed for
such person (or for one or more of the persons comprising the
group).
(2) Pooled fund
The term "pooled fund" means an unemployment fund or any part
thereof (other than a reserve account or a guaranteed employment
account) into which the total contributions of persons
contributing thereto are payable, in which all contributions are
mingled and undivided, and from which compensation is payable to
all individuals eligible for compensation from such fund.
(3) Partially pooled account
The term "partially pooled account" means a part of an
unemployment fund in which part of the fund all contributions
thereto are mingled and undivided, and from which part of the
fund compensation is payable only to individuals to whom
compensation would be payable from a reserve account or from a
guaranteed employment account but for the exhaustion or
termination of such reserve account or of such guaranteed
employment account. Payments from a reserve account or guaranteed
employment account into a partially pooled account shall not be
construed to be inconsistent with the provisions of paragraph (1)
or (4).
(4) Guaranteed employment account
The term "guaranteed employment account" means a separate
account, in an unemployment fund, maintained with respect to a
person (or group of persons) having individuals in his (or their)
employ who, in accordance with the provisions of the State law or
of a plan thereunder approved by the State agency,
(A) guarantees in advance at least 30 hours of work, for
which remuneration will be paid at not less than stated rates,
for each of 40 weeks (or if more, 1 weekly hour may be deducted
for each added week guaranteed) in a year, to all the
individuals who are in his (or their) employ in, and who
continue to be available for suitable work in, one or more
distinct establishments, except that any such individual's
guaranty may commence after a probationary period (included
within the 11 or less consecutive weeks immediately following
the first week in which the individual renders services), and
(B) gives security or assurance, satisfactory to the State
agency, for the fulfillment of such guaranties, from which
account, unless such account is exhausted or terminated, is
paid all and only compensation, payable on the basis of
services performed for such person (or for one or more of the
persons comprising the group), to any such individual whose
guaranteed remuneration has not been paid (either pursuant to
the guaranty or from the security or assurance provided for the
fulfillment of the guaranty), or whose guaranty is not renewed
and who is otherwise eligible for compensation under the State
law.
(5) Year
The term "year" means any 12 consecutive calendar months.
(6) Balance
The term "balance", with respect to a reserve account or a
guaranteed employment account, means the amount standing to the
credit of the account as of the computation date; except that, if
subsequent to January 1, 1940, any moneys have been paid into or
credited to such account other than payments thereto by persons
having individuals in their employ, such term shall mean the
amount in such account as of the computation date less the total
of such other moneys paid into or credited to such account
subsequent to January 1, 1940.
(7) Computation date
The term "computation date" means the date, occurring at least
once in each calendar year and within 27 weeks prior to the
effective date of new rates of contributions, as of which such
rates are computed.
(8) Reduced rate
The term "reduced rate" means a rate of contributions lower
than the standard rate applicable under the State law, and the
term "standard rate" means the rate on the basis of which
variations therefrom are computed.
(d) Voluntary contributions
A State law may, without being deemed to violate the standards
set forth in subsection (a), permit voluntary contributions to be
used in the computation of reduced rates if such contributions are
paid prior to the expiration of 120 days after the beginning of the
year for which such rates are effective.
(e) Payments by certain nonprofit organizations
A State may, without being deemed to violate the standards set
forth in subsection (a), permit an organization (or a group of
organizations) described in section 501(c)(3) which is exempt from
income tax under section 501(a) to elect (in lieu of paying
contributions) to pay into the State unemployment fund amounts
equal to the amounts of compensation attributable under the State
law to service performed in the employ of such organization (or
group).
(f) Transition
To facilitate the orderly transition to coverage of service to
which section 3309(a)(1)(A) applies, a State law may provide that
an organization (or group of organizations) which elects before
April 1, 1972, to make payments (in lieu of contributions) into the
State unemployment fund as provided in section 3309(a)(2), and
which had paid contributions into such fund under the State law
with respect to such service performed in its employ before January
1, 1969, is not required to make any such payment (in lieu of
contributions) on account of compensation paid after its election
as heretofore described which is attributable under the State law
to service performed in its employ, until the total of such
compensation equals the amount -
(1) by which the contributions paid by such organization (or
group) with respect to a period before the election provided by
section 3309(a)(2), exceed
(2) the unemployment compensation for the same period which was
charged to the experience-rating account of such organization (or
group) or paid under the State law on the basis of wages paid by
it or service performed in its employ, whichever is appropriate.
(g) Transitional rule for Unemployment Compensation Amendments of
1976
To facilitate the orderly transition to coverage of service to
which section 3309(a)(1)(A) applies by reason of the enactment of
the Unemployment Compensation Amendments of 1976, a State law may
provide that an organization (or group of organizations) which
elects, when such election first becomes available under the State
law with respect to such service, to make payments (in lieu of
contributions) into the State unemployment fund as provided in
section 3309(a)(2), and which had paid contributions into such fund
under the State law with respect to such service performed in its
employ before the date of the enactment of this subsection, is not
required to make any such payment (in lieu of contributions) on
account of compensation paid after its election as heretofore
described which is attributable under the State law to such service
performed in its employ, until the total of such compensation
equals the amount -
(1) by which the contributions paid by such organization (or
group) on the basis of wages for such service with respect to a
period before the election provided by section 3309(a)(2), exceed
(2) the unemployment compensation for the same period which was
charged to the experience-rating account of such organization (or
group) or paid under the State law on the basis of such service
performed in its employ or wages paid for such service, whichever
is appropriate.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 440; Sept. 1, 1954, ch. 1212,
Sec. 2, 68 Stat. 1130; Pub. L. 91-373, title I, Secs. 104(c),
122(a), 142(c)-(e), Aug. 10, 1970, 84 Stat. 699, 702, 707; Pub. L.
94-455, title XIX, Secs. 1903(a)(13), 1906(b)(13)(C), Oct. 4, 1976,
90 Stat. 1809, 1834; Pub. L. 94-566, title I, Sec. 122(a), (b),
Oct. 20, 1976, 90 Stat. 2675, 2676.)
-REFTEXT-
REFERENCES IN TEXT
The Unemployment Compensation Amendments of 1976, referred to in
subsec. (g), is Pub. L. 94-566, Oct. 20, 1976, 90 Stat. 2667, as
amended. For complete classification of this Act to the Code, see
Short Title of 1976 Amendment note set out under section 3311 of
this title and Tables.
The date of enactment of this subsection, referred to in subsec.
(g), is the date of enactment of Pub. L. 94-566, which was approved
Oct. 20, 1976.
-MISC1-
AMENDMENTS
1976 - Subsec. (b)(1) to (3). Pub. L. 94-455 substituted
reference to Secretary of the Treasury for reference to Secretary
and reference to 12-month period for reference to 12 or 10-month
period, as the case may be, and struck out reference to (10-month
period in the case of Oct. 31, 1972) following provisions relating
to 12-month period ending Oct. 31.
Subsec. (f). Pub. L. 94-566, Sec. 122(b), substituted "which
elects before April 1, 1972," for "which elects, when such election
first becomes available under the State law,".
Subsec. (g). Pub. L. 94-566, Sec. 122(a), added subsec. (g).
1970 - Subsec. (a). Pub. L. 91-373, Sec. 122(a), added to
provision following par. (3) the authorization for the allowance of
a reduced rate by State law (but not less than 1 percent) on a
reasonable basis other than as permitted by par. (1), (2), or (3).
Subsec. (b). Pub. L. 91-373, Sec. 142(c)-(e), changed the
certification date referred to in pars. (1) to (3) from Dec. 31 to
Oct. 31, with provision for a 10-month period in the case of Oct.
31, 1972, and, except for Oct. 31, 1972, provided for a 12-month
period ending on Oct. 31 each year.
Subsecs. (e), (f). Pub. L. 91-373, Sec. 104(c), added subsecs.
(e) and (f).
1954 - Subsec. (a). Act Sept. 1, 1954, inserted sentence relating
to reduced rates for new employers.
EFFECTIVE DATE OF 1976 AMENDMENTS
Section 122(c) of Pub. L. 94-566 provided that: "The amendment
made by subsection (a) [amending this section] shall take effect on
the date of the enactment of this Act [Oct. 20, 1976]. The
amendment made by subsection (b) [amending this section] shall take
effect on January 1, 1970."
Amendment by section 1903(a)(13) of Pub. L. 94-455 applicable
with respect to wages paid after Dec. 31, 1976, see section 1903(d)
of Pub. L. 94-455, set out as a note under section 3101 of this
title.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by section 104(c) of Pub. L. 91-373 [amending this
section] to take effect Jan. 1, 1970, see section 104(d)(1) of Pub.
L. 91-373, set out as a note under section 3304 of this title.
Section 122(b) of Pub. L. 91-373 provided that: "The amendments
made by subsection (a) [amending this section] shall apply with
respect to taxable years beginning after December 31, 1971."
Amendment by section 142(c)-(e) of Pub. L. 91-373 applicable with
respect to taxable year 1972 and taxable years thereafter, see
section 142(i) of Pub. L. 91-373, set out as a note under section
3302 of this title.
EFFECTIVE DATE OF 1954 AMENDMENT
Section 2 of act Sept. 1, 1954, provided that the amendment made
by that section is effective after Dec. 31, 1954.
TREATMENT OF CERTAIN CHARITABLE ORGANIZATIONS RETROACTIVELY
DETERMINED TO BE DESCRIBED IN SECTION 501(C)(3) OF THIS TITLE
Pub. L. 98-21, title V, Sec. 524, Apr. 20, 1983, 97 Stat. 149, as
amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095,
provided that: "If -
"(1) an organization did not make an election to make payments
(in lieu of contributions) as provided in section 3309(a)(2) of
the Internal Revenue Code of 1986 [formerly I.R.C. 1954] before
April 1, 1972, because such organization, as of such date, was
treated as an organization described in section 501(c)(4) of such
Code,
"(2) the Internal Revenue Service subsequently determined that
such organization was described in section 501(c)(3) of such
Code, and
"(3) such organization made such an election before the earlier
of -
"(A) the date 18 months after such election was first
available to it under the State law, or
"(B) January 1, 1984,
then section 3303(f) of such Code shall be applied with respect to
such organization as if it did not contain the requirement that the
election be made before April 1, 1972, and by substituting 'January
1, 1982' for 'January 1, 1969'."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 3302, 3304, 3310 of this
title.
-End-
-CITE-
26 USC Sec. 3304 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT
-HEAD-
Sec. 3304. Approval of State laws
-STATUTE-
(a) Requirements
The Secretary of Labor shall approve any State law submitted to
him, within 30 days of such submission, which he finds provides
that -
(1) all compensation is to be paid through public employment
offices or such other agencies as the Secretary of Labor may
approve;
(2) no compensation shall be payable with respect to any day of
unemployment occurring within 2 years after the first day of the
first period with respect to which contributions are required;
(3) all money received in the unemployment fund shall (except
for refunds of sums erroneously paid into such fund and except
for refunds paid in accordance with the provisions of section
3305(b)) immediately upon such receipt be paid over to the
Secretary of the Treasury to the credit of the Unemployment Trust
Fund established by section 904 of the Social Security Act (42
U.S.C. 1104);
(4) all money withdrawn from the unemployment fund of the State
shall be used solely in the payment of unemployment compensation,
exclusive of expenses of administration, and for refunds of sums
erroneously paid into such fund and refunds paid in accordance
with the provisions of section 3305(b); except that -
(A) an amount equal to the amount of employee payments into
the unemployment fund of a State may be used in the payment of
cash benefits to individuals with respect to their disability,
exclusive of expenses of administration;
(B) the amounts specified by section 903 (c)(2) or 903(d)(4)
of the Social Security Act may, subject to the conditions
prescribed in such section, be used for expenses incurred by
the State for administration of its unemployment compensation
law and public employment offices;
(C) nothing in this paragraph shall be construed to prohibit
deducting an amount from unemployment compensation otherwise
payable to an individual and using the amount so deducted to
pay for health insurance, or the withholding of Federal, State,
or local individual income tax, if the individual elected to
have such deduction made and such deduction was made under a
program approved by the Secretary of Labor;
(D) amounts may be deducted from unemployment benefits and
used to repay overpayments as provided in section 303(g) of the
Social Security Act;
(E) amounts may be withdrawn for the payment of short-time
compensation under a plan approved by the Secretary of Labor;
and
(F) amounts may be withdrawn for the payment of allowances
under a self-employment assistance program (as defined in
section 3306(t));
(5) compensation shall not be denied in such State to any
otherwise eligible individual for refusing to accept new work
under any of the following conditions:
(A) if the position offered is vacant due directly to a
strike, lockout, or other labor dispute;
(B) if the wages, hours, or other conditions of the work
offered are substantially less favorable to the individual than
those prevailing for similar work in the locality;
(C) if as a condition of being employed the individual would
be required to join a company union or to resign from or
refrain from joining any bona fide labor organization;
(6)(A) compensation is payable on the basis of service to which
section 3309(a)(1) applies, in the same amount, on the same
terms, and subject to the same conditions as compensation payable
on the basis of other service subject to such law; except that -
(i) with respect to services in an instructional, research,
or principal administrative capacity for an educational
institution to which section 3309(a)(1) applies, compensation
shall not be payable based on such services for any week
commencing during the period between two successive academic
years or terms (or, when an agreement provides instead for a
similar period between two regular but not successive terms,
during such period) to any individual if such individual
performs such services in the first of such academic years (or
terms) and if there is a contract or reasonable assurance that
such individual will perform services in any such capacity for
any educational institution in the second of such academic
years or terms,
(ii) with respect to services in any other capacity for an
educational institution to which section 3309(a)(1) applies -
(I) compensation payable on the basis of such services may
be denied to any individual for any week which commences
during a period between 2 successive academic years or terms
if such individual performs such services in the first of
such academic years or terms and there is a reasonable
assurance that such individual will perform such services in
the second of such academic years or terms, except that
(II) if compensation is denied to any individual for any
week under subclause (I) and such individual was not offered
an opportunity to perform such services for the educational
institution for the second of such academic years or terms,
such individual shall be entitled to a retroactive payment of
the compensation for each week for which the individual filed
a timely claim for compensation and for which compensation
was denied solely by reason of subclause (I),
(iii) with respect to any services described in clause (i) or
(ii), compensation payable on the basis of such services shall
be denied to any individual for any week which commences during
an established and customary vacation period or holiday recess
if such individual performs such services in the period
immediately before such vacation period or holiday recess, and
there is a reasonable assurance that such individual will
perform such services in the period immediately following such
vacation period or holiday recess,
(iv) with respect to any services described in clause (i) or
(ii), compensation payable on the basis of services in any such
capacity shall be denied as specified in clauses (i), (ii), and
(iii) to any individual who performed such services in an
educational institution while in the employ of an educational
service agency, and for this purpose the term "educational
service agency" means a governmental agency or governmental
entity which is established and operated exclusively for the
purpose of providing such services to one or more educational
institutions,
(v) with respect to services to which section 3309(a)(1)
applies, if such services are provided to or on behalf of an
educational institution, compensation may be denied under the
same circumstances as described in clauses (i) through (iv),
and
(vi) with respect to services described in clause (ii),
clauses (iii) and (iv) shall be applied by substituting "may be
denied" for "shall be denied", and
(B) payments (in lieu of contributions) with respect to service
to which section 3309(a)(1) applies may be made into the State
unemployment fund on the basis set forth in section 3309(a)(2);
(7) an individual who has received compensation during his
benefit year is required to have had work since the beginning of
such year in order to qualify for compensation in his next
benefit year;
(8) compensation shall not be denied to an individual for any
week because he is in training with the approval of the State
agency (or because of the application, to any such week in
training, of State law provisions relating to availability for
work, active search for work, or refusal to accept work);
(9)(A) compensation shall not be denied or reduced to an
individual solely because he files a claim in another State (or a
contiguous country with which the United States has an agreement
with respect to unemployment compensation) or because he resides
in another State (or such a contiguous country) at the time he
files a claim for unemployment compensation;
(B) the State shall participate in any arrangements for the
payment of compensation on the basis of combining an individual's
wages and employment covered under the State law with his wages
and employment covered under the unemployment compensation law of
other States which are approved by the Secretary of Labor in
consultation with the State unemployment compensation agencies as
reasonably calculated to assure the prompt and full payment of
compensation in such situations. Any such arrangement shall
include provisions for (i) applying the base period of a single
State law to a claim involving the combining of an individual's
wages and employment covered under two or more State laws, and
(ii) avoiding duplicate use of wages and employment by reason of
such combining;
(10) compensation shall not be denied to any individual by
reason of cancellation of wage credits or total reduction of his
benefit rights for any cause other than discharge for misconduct
connected with his work, fraud in connection with a claim for
compensation, or receipt of disqualifying income;
(11) extended compensation shall be payable as provided by the
Federal-State Extended Unemployment Compensation Act of 1970;
(12) no person shall be denied compensation under such State
law solely on the basis of pregnancy or termination of pregnancy;
(13) compensation shall not be payable to any individual on the
basis of any services, substantially all of which consist of
participating in sports or athletic events or training or
preparing to so participate, for any week which commences during
the period between two successive sport seasons (or similar
periods) if such individual performed such services in the first
of such seasons (or similar periods) and there is a reasonable
assurance that such individual will perform such services in the
later of such seasons (or similar periods);
(14)(A) compensation shall not be payable on the basis of
services performed by an alien unless such alien is an individual
who was lawfully admitted for permanent residence at the time
such services were performed, was lawfully present for purposes
of performing such services, or was permanently residing in the
United States under color of law at the time such services were
performed (including an alien who was lawfully present in the
United States as a result of the application of the provisions of
section 212(d)(5) of the Immigration and Nationality Act),
(B) any data or information required of individuals applying
for compensation to determine whether compensation is not payable
to them because of their alien status shall be uniformly required
from all applicants for compensation, and
(C) in the case of an individual whose application for
compensation would otherwise be approved, no determination by the
State agency that compensation to such individual is not payable
because of his alien status shall be made except upon a
preponderance of the evidence;
(15) the amount of compensation payable to an individual for
any week which begins after March 31, 1980, and which begins in a
period with respect to which such individual is receiving a
governmental or other pension, retirement or retired pay,
annuity, or any other similar periodic payment which is based on
the previous work of such individual shall be reduced (but not
below zero) by an amount equal to the amount of such pension,
retirement or retired pay, annuity, or other payment, which is
reasonably attributable to such week except that -
(A) the requirements of this paragraph shall apply to any
pension, retirement or retired pay, annuity, or other similar
periodic payment only if -
(i) such pension, retirement or retired pay, annuity, or
similar payment is under a plan maintained (or contributed
to) by a base period employer or chargeable employer (as
determined under applicable law), and
(ii) in the case of such a payment not made under the
Social Security Act or the Railroad Retirement Act of 1974
(or the corresponding provisions of prior law), services
performed for such employer by the individual after the
beginning of the base period (or remuneration for such
services) affect eligibility for, or increase the amount of,
such pension, retirement or retired pay, annuity, or similar
payment, and
(B) the State law may provide for limitations on the amount
of any such a reduction to take into account contributions made
by the individual for the pension, retirement or retired pay,
annuity, or other similar periodic payment;
(16)(A) wage information contained in the records of the agency
administering the State law which is necessary (as determined by
the Secretary of Health and Human Services in regulations) for
purposes of determining an individual's eligibility for
assistance, or the amount of such assistance, under a State
program funded under part A of title IV of the Social Security
Act, shall be made available to a State or political subdivision
thereof when such information is specifically requested by such
State or political subdivision for such purposes,
(B) wage and unemployment compensation information contained in
the records of such agency shall be furnished to the Secretary of
Health and Human Services (in accordance with regulations
promulgated by such Secretary) as necessary for the purposes of
the National Directory of New Hires established under section
453(i) of the Social Security Act, and
(C) such safeguards are established as are necessary (as
determined by the Secretary of Health and Human Services in
regulations) to insure that information furnished under
subparagraph (A) or (B) is used only for the purposes authorized
under such subparagraph;
(17) any interest required to be paid on advances under title
XII of the Social Security Act shall be paid in a timely manner
and shall not be paid, directly or indirectly (by an equivalent
reduction in State unemployment taxes or otherwise) by such State
from amounts in such State's unemployment fund;
(18) Federal individual income tax from unemployment
compensation is to be deducted and withheld if an individual
receiving such compensation voluntarily requests such deduction
and withholding; and
(19) all the rights, privileges, or immunities conferred by
such law or by acts done pursuant thereto shall exist subject to
the power of the legislature to amend or repeal such law at any
time.
(b) Notification
The Secretary of Labor shall, upon approving such law, notify the
governor of the State of his approval.
(c) Certification
On October 31 of each taxable year the Secretary of Labor shall
certify to the Secretary of the Treasury each State whose law he
has previously approved, except that he shall not certify any State
which, after reasonable notice and opportunity for hearing to the
State agency, the Secretary of Labor finds has amended its law so
that it no longer contains the provisions specified in subsection
(a) or has with respect to the 12-month period ending on such
October 31 failed to comply substantially with any such provision
in such subsection. No finding of a failure to comply substantially
with any provision in paragraph (5) of subsection (a) shall be
based on an application or interpretation of State law (1) until
all administrative review provided for under the laws of the State
has been exhausted, or (2) with respect to which the time for
judicial review provided by the laws of the State has not expired,
or (3) with respect to which any judicial review is pending. On
October 31 of any taxable year, the Secretary of Labor shall not
certify any State which, after reasonable notice and opportunity
for hearing to the State agency, the Secretary of Labor finds has
failed to amend its law so that it contains each of the provisions
required by law to be included therein (including provisions
relating to the Federal-State Extended Unemployment Compensation
Act of 1970 (or any amendments thereto) as required under
subsection (a)(11)), or has, with respect to the twelve-month
period ending on such October 31, failed to comply substantially
with any such provision.
(d) Notice of noncertification
If at any time the Secretary of Labor has reason to believe that
a State whose law he has previously approved may not be certified
under subsection (c), he shall promptly so notify the governor of
such State.
(e) Change of law during 12-month period
Whenever -
(1) any provision of this section, section 3302, or section
3303 refers to a 12-month period ending on October 31 of a year,
and
(2) the law applicable to one portion of such period differs
from the law applicable to another portion of such period,
then such provision shall be applied by taking into account for
each such portion the law applicable to such portion.
(f) Definition of institution of higher education
For purposes of subsection (a)(6), the term "institution of
higher education" means an educational institution in any State
which -
(1) admits as regular students only individuals having a
certificate of graduation from a high school, or the recognized
equivalent of such a certificate;
(2) is legally authorized within such State to provide a
program of education beyond high school;
(3) provides an educational program for it which awards a
bachelor's or higher degree, or provides a program which is
acceptable for full credit toward such a degree, or offers a
program of training to prepare students for gainful employment in
a recognized occupation; and
(4) is a public or other nonprofit institution.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 443; Pub. L. 91-373, title I,
Secs. 104(a), 108(a), 121(a), 131(b)(2), 142(f)-(h), title II, Sec.
206, Aug. 10, 1970, 84 Stat. 697, 701, 704, 707, 708, 712; Pub. L.
94-455, title XIX, Secs. 1903(a)(14), 1906(b)(13)(C), (E), Oct. 4,
1976, 90 Stat. 1809, 1834; Pub. L. 94-566, title I, Sec. 115(c)(1),
(5), title III, Secs. 312(a), (b), 314(a), title V, Sec. 506(b),
Oct. 20, 1976, 90 Stat. 2670, 2671, 2679, 2680, 2687; Pub. L.
95-19, title III, Sec. 302(a), (c), (e), Apr. 12, 1977, 91 Stat.
44, 45; Pub. L. 95-171, Sec. 2(a), Nov. 12, 1977, 91 Stat. 1353;
Pub. L. 95-216, title IV, Sec. 403(b), Dec. 20, 1977, 91 Stat.
1561; Pub. L. 96-364, title IV, Sec. 414(a), Sept. 26, 1980, 94
Stat. 1310; Pub. L. 97-35, title XXIV, Sec. 2408(a), Aug. 13, 1981,
95 Stat. 880; Pub. L. 97-248, title I, Sec. 193(a), Sept. 3, 1982,
96 Stat. 408; Pub. L. 98-21, title V, Secs. 515(b), 521(a), 523(a),
Apr. 20, 1983, 97 Stat. 147, 148; Pub. L. 99-272, title XII, Sec.
12401(b)(1), Apr. 7, 1986, 100 Stat. 297; Pub. L. 99-514, title
XVIII, Sec. 1899A(43), Oct. 22, 1986, 100 Stat. 2960; Pub. L.
101-649, title I, Sec. 162(e)(4), Nov. 29, 1990, 104 Stat. 5011;
Pub. L. 102-164, title III, Sec. 302(a), Nov. 15, 1991, 105 Stat.
1059; Pub. L. 102-318, title IV, Sec. 401(a)(1), July 3, 1992, 106
Stat. 298; Pub. L. 103-182, title V, Sec. 507(b)(1), Dec. 8, 1993,
107 Stat. 2154; Pub. L. 103-465, title VII, Sec. 702(b), (c)(1),
Dec. 8, 1994, 108 Stat. 4997; Pub. L. 104-193, title I, Sec.
110(l)(1), formerly Sec. 110(l)(2), title III, Sec. 316(g)(2), Aug.
22, 1996, 110 Stat. 2173, 2218, renumbered Pub. L. 105-33, title V,
Sec. 5514(a)(2), Aug. 5, 1997, 111 Stat. 620; Pub. L. 107-147,
title II, Sec. 209(d)(1), Mar. 9, 2002, 116 Stat. 33.)
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REFERENCES IN TEXT
The Social Security Act, referred to in subsec. (a)(4)(B), (D),
(15)(A)(ii), (16)(A), (B), (17), is act Aug. 14, 1935, ch. 531, 49
Stat. 620, as amended, which is classified generally to chapter 7
(Sec. 301 et seq.) of Title 42, The Public Health and Welfare. Part
A of title IV and title XII of the Act are classified generally to
part A (Sec. 601 et seq.) of subchapter IV and subchapter XII (Sec.
1321 et seq.), respectively, of chapter 7 of Title 42. Sections
303(g), 453(i), and 903(c)(2), (d)(4) of the Act are classified to
sections 503(g), 653(i), and 1103(c)(2), (d)(4), respectively, of
Title 42. For complete classification of this Act to the Code, see
Short Title note set out under section 1305 of Title 42 and Tables.
The Federal-State Extended Unemployment Compensation Act of 1970,
referred to in subsecs. (a)(11) and (c), is Pub. L. 91-373, title
II, Aug. 10, 1970, 84 Stat. 708, as amended, which is set out as a
note below.
Section 212(d)(5) of the Immigration and Nationality Act,
referred to in subsec. (a)(14)(A), is classified to section
1182(d)(5) of Title 8, Aliens and Nationality.
The Railroad Retirement Act of 1974, referred to in subsec.
(a)(15)(A)(ii), is act Aug. 29, 1935, ch. 812, as amended generally
by Pub. L. 93-445, title I, Sec. 101, Oct. 16, 1974, 88 Stat. 1305,
which is classified generally to subchapter IV (Sec. 231 et seq.)
of chapter 9 of Title 45, Railroads. For further details and
complete classification of this Act to the Code, see Codification
note set out preceding section 231 of Title 45, section 231t of
Title 45, and Tables.
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AMENDMENTS
2002 - Subsec. (a)(4)(B). Pub. L. 107-147 inserted "or 903(d)(4)"
before "of the Social Security Act".
1996 - Subsec. (a)(16)(A). Pub. L. 104-193, Sec. 316(g)(2)(C),
struck out "and" at end.
Pub. L. 104-193, Sec. 316(g)(2)(A), substituted "Secretary of
Health and Human Services" for "Secretary of Health, Education, and
Welfare".
Pub. L. 104-193, Sec. 110(l)(1), formerly Sec. 110(l)(2), as
renumbered by Pub. L. 105-33, substituted "eligibility for
assistance, or the amount of such assistance, under a State program
funded" for "eligibility for aid or services, or the amount of such
aid or services, under a State plan for aid and services to needy
families with children approved".
Subsec. (a)(16)(B). Pub. L. 104-193, Sec. 316(g)(2)(E), added
subpar. (B). Former subpar. (B) redesignated (C).
Pub. L. 104-193, Sec. 316(g)(2)(B), substituted "information
furnished under subparagraph (A) or (B) is used only for the
purposes authorized under such subparagraph;" for "such information
is used only for the purposes authorized under subparagraph (A);".
Pub. L. 104-193, Sec. 316(g)(2)(A), substituted "Secretary of
Health and Human Services" for "Secretary of Health, Education, and
Welfare".
Subsec. (a)(16)(C). Pub. L. 104-193, Sec. 316(g)(2)(D),
redesignated subpar. (B) as (C).
1994 - Subsec. (a)(4)(C). Pub. L. 103-465, Sec. 702(c)(1),
inserted ", or the withholding of Federal, State, or local
individual income tax," after "health insurance".
Subsec. (a)(17) to (19). Pub. L. 103-465, Sec. 702(b), struck out
"and" at end of par. (17), added par. (18), and redesignated former
par. (18) as (19).
1993 - Subsec. (a)(4)(F). Pub. L. 103-182 added subpar. (F).
1992 - Subsec. (a)(4)(E). Pub. L. 102-318 added subpar. (E).
1991 - Subsec. (a)(6)(A)(ii)(I). Pub. L. 102-164, Sec. 302(a)(1),
substituted "may be denied" for "shall be denied".
Subsec. (a)(6)(A)(iii), (iv). Pub. L. 102-164, Sec. 302(a)(2),
which directed that "and" be struck out at end of cls. (iii) and
(iv), could be executed only to cl. (iv) because "and" did not
appear at end of cl. (iii).
Subsec. (a)(6)(A)(vi). Pub. L. 102-164, Sec. 302(a)(2), added cl.
(vi).
1990 - Subsec. (a)(14)(A). Pub. L. 101-649 struck out reference
to section 203(a)(7) of Immigration and Nationality Act.
1986 - Subsec. (a)(4)(D). Pub. L. 99-272 added subpar. (D).
Subsec. (a)(6)(A)(iii). Pub. L. 99-514 struck out "and" at end.
1983 - Subsec. (a)(4)(C). Pub. L. 98-21, Sec. 523(a), added
subpar. (C).
Subsec. (a)(6)(A)(ii)(I), (iii), (iv). Pub. L. 98-21, Sec.
521(a)(2), substituted "shall be denied" for "may be denied".
Subsec. (a)(6)(A)(v). Pub. L. 98-21, Sec. 521(a)(1), added cl.
(v).
Subsec. (a)(17), (18). Pub. L. 98-21, Sec. 515(b), added par.
(17) and redesignated former par. (17) as (18).
1982 - Subsec. (a)(6)(A)(ii). Pub. L. 97-248 redesignated
existing provisions as provisions preceding subcl. (I) and subcl.
(I), and in such provisions as so redesignated, struck out "(other
than an institution of higher education)" after "capacity for an
educational institution", substituted "2" for "two", and inserted
"except that" at end of subcl. (I), and added subcl. (II).
1981 - Subsec. (c). Pub. L. 97-35 substituted provisions relating
to limitations on certification on Oct. 31 of any taxable year, for
provisions relating to limitations on certification on Oct. 31 of
any taxable year after 1971, and on Oct. 31 of any taxable year
after 1977.
1980 - Subsec. (a)(15). Pub. L. 96-364 inserted provisions
relating to applicability to any pension, retirement or retired
pay, annuity, or other similar periodic payment.
1977 - Subsec. (a)(6)(A)(i). Pub. L. 95-19, Sec. 302(c)(1), (2),
inserted a comma between "instructional" and "research",
substituted "two successive academic years or terms" for "two
successive academic years", and struck out "and" after "the second
of such academic years or terms,".
Subsec. (a)(6)(A)(iii). Pub. L. 95-19, Sec. 302(c)(3), added cl.
(iii).
Subsec. (a)(6)(A)(iv). Pub. L. 95-171 added cl. (iv).
Subsec. (a)(14)(A). Pub. L. 95-19, Sec. 302(a), substituted "who
was lawfully admitted for permanent residence at the time such
services were performed, was lawfully present for purposes of
performing such services, or was permanently residing in the United
States under color of law at the time such services were performed
(including an alien who was" for "who has been lawfully admitted
for permanent residence or otherwise is permanently residing in the
United States under color of law (including an alien who is".
Subsec. (a)(15). Pub. L. 95-19, Sec. 302(e), substituted "March
31, 1980" for "September 30, 1979".
Subsec. (a)(16), (17). Pub. L. 95-216 added par. (16). Former
par. (16) redesignated (17).
1976 - Subsec. (a)(3). Pub. L. 94-455, Secs. 1903(a)(14)(A),
1906(b)(13)(C), inserted "of the Treasury" after "to the Secretary"
and struck out "49 Stat. 640; 52 Stat. 1104, 1105;" before "42
U.S.C. 1104".
Subsec. (a)(6)(A). Pub. L. 94-566, Sec. 115(c)(1), designated
existing provisions as cl. (i), added cl. (ii), and in cl. (i) as
so designated substituted "educational institution" for
"institution of higher education", "an agreement provides" for "the
contract provides", and "if such individual performs such services
in the first of such academic years (or terms) and if there is a
contract or reasonable assurance that such individual will perform
services in any such capacity for any educational institution in
the second of such academic years or terms, and" for "who has a
contract to perform services in any such capacity for any
institution or institutions of higher education for both of such
academic years or both of such terms, and".
Subsec. (a)(6)(B). Pub. L. 94-566, Sec. 506(b), substituted
"section 3309(a)(1)" for "section 3309(a)(1)(A)".
Subsec. (a)(12). Pub. L. 94-566, Sec. 312(a), substituted
provisions that no person shall be denied compensation under such
State law solely on the basis of pregnancy or termination of
pregnancy for provisions that each political subdivision of the
State should have the right to elect to have compensation payable
to employees thereof (whose services were not otherwise subject to
such law) based on service performed by such employees in the
hospitals and institutions of higher education (as defined in
section 3309(d)) operated by such political subdivision; and, if
any such political subdivision did elect to have compensation
payable to such employees thereof (A) the political subdivision
elected should pay into the State unemployment fund, with respect
to the service of such employees, payments (in lieu of
contributions), and (B) such employees would be entitled to
receive, on the basis of such service, compensation payable on the
same conditions as compensation which was payable on the basis of
similar service for the State which was subject to such law.
Subsec. (a)(13) to (16). Pub. L. 94-566, Sec. 314(a), added pars.
(13) to (15) and redesignated former par. (13) as (16).
Subsec. (c). Pub. L. 94-566, Sec. 312(b), provided that on Oct.
31 of any taxable year after 1977, the Secretary shall not certify
any State which, after reasonable notice and opportunity for a
hearing to the State agency, the Secretary of Labor finds has
failed to amend its law so that it contains each of the provisions
required by reason of the enactment of the Unemployment
Compensation Amendments of 1976 to be included therein, or has with
respect to the 12-month period ending on such Oct. 31, failed to
comply substantially with any such provision.
Pub. L. 94-455, Secs. 1903(a)(14)(B), 1906(b)(13)(C), (E),
inserted "of the Treasury" after "certify to the Secretary",
substituted "the Secretary of Labor shall" for "the Secretary
shall" and struck out "(10-month period in the case of October 31,
1972)" after "to the 12-month period".
Subsec. (f). Pub. L. 94-566, Sec. 115(c)(5), added subsec. (f).
1970 - Subsec. (a)(6) to (13). Pub. L. 91-373, Secs. 104(a),
108(a), 121(a), 206, added pars. (6) to (12) and redesignated
former par. (6) as (13).
Subsec. (c). Pub. L. 91-373, Sec. 131(b)(2), clarified provisions
governing procedure to be followed with respect to a finding of the
Secretary of Labor that a state has failed to comply substantially
with any of the provisions of subsec. (a)(5).
Pub. L. 91-373, Sec. 142(f), substituted "October 31" for
"December 31" as certification date and "12-month period ending on
such October 31" for "taxable year" and prohibited certifications
for failure to amend State laws to contain provisions required by
reason of enactment of the Employment Security Amendments of 1970.
Subsec. (d). Pub. L. 91-373, Sec. 142(g), substituted "If at any
time" for "If, at any time during the taxable year,".
Subsec. (e). Pub. L. 91-373, Sec. 142(h), added subsec. (e).
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 110(l)(1) of Pub. L. 104-193 effective July
1, 1997, with transition rules relating to State options to
accelerate such date, rules relating to claims, actions, and
proceedings commenced before such date, rules relating to closing
out of accounts for terminated or substantially modified programs
and continuance in office of Assistant Secretary for Family
Support, and provisions relating to termination of entitlement
under AFDC program, see section 116 of Pub. L. 104-193, as amended,
set out as an Effective Date note under section 601 of Title 42,
The Public Health and Welfare.
For effective date of amendment by section 316(g)(2) of Pub. L.
104-193, see section 395(a)-(c) of Pub. L. 104-193, set out as a
note under section 654 of Title 42.
EFFECTIVE DATE OF 1994 AMENDMENT
Section 702(d) of Pub. L. 103-465 provided that: "The amendments
made by this section [amending this section, sections 3306 and 3402
of this title, and section 503 of Title 42, The Public Health and
Welfare] shall apply to payments made after December 31, 1996."
EFFECTIVE DATE OF 1991 AMENDMENT
Section 302(b) of Pub. L. 102-164 provided that: "The amendments
made by this section [amending this section] section shall apply in
the case of compensation paid for weeks beginning on or after the
date of the enactment of this Act [Nov. 15, 1991]."
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-649 effective Oct. 1, 1991, and
applicable beginning with fiscal year 1992, see section 161(a) of
Pub. L. 101-649, set out as a note under section 1101 of Title 8,
Aliens and Nationality.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-272 applicable to recoveries made on or
after Apr. 7, 1986, and applicable with respect to overpayments
made before, on, or after such date, see section 12401(c) of Pub.
L. 99-272, set out as a note under section 503 of Title 42, The
Public Health and Welfare.
EFFECTIVE DATE OF 1983 AMENDMENT
Section 521(b) of Pub. L. 98-21 provided that:
"(1) Except as provided in paragraph (2), the amendments made by
this section [amending this section] shall apply in the case of
compensation paid for weeks beginning on or after April 1, 1984.
"(2) In the case of a State with respect to which the Secretary
of Labor has determined that State legislation is required in order
to comply with the amendment made by this section, the amendment
made by this section shall apply in the case of compensation paid
for weeks which begin on or after April 1, 1984, and after the end
of the first session of the State legislature which begins after
the date of the enactment of this Act [Apr. 20, 1983], or which
began prior to the date of the enactment of this Act and remained
in session for at least twenty-five calendar days after such date
of enactment. For purposes of the preceding sentence, the term
'session' means a regular, special, budget, or other session of a
State legislature."
Section 523(c) of Pub. L. 98-21 provided that: "The amendments
made by this section [amending this section and section 503 of
Title 42, The Public Health and Welfare] shall take effect on the
date of the enactment of this Act [Apr. 20, 1983]."
EFFECTIVE DATE OF 1982 AMENDMENT
Section 193(b) of Pub. L. 97-248, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) The amendment made by subsection (a) [amending this section]
shall apply to weeks of unemployment beginning after the date of
the enactment of this Act [Sept. 3, 1982].
"(2) The amendment made by subsection (a) [amending this
section], insofar as it requires retroactive payments of
compensation to employees of educational institutions other than
insti |
