[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1088 Introduced in House (IH)]

  1st Session
                                H. R. 1088

    To amend the Internal Revenue Code of 1986 to provide that the 
employment taxes shall not apply to amounts paid by certain State funds 
                   as compensation for unpaid wages.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 1, 1995

 Mr. DeFazio introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to provide that the 
employment taxes shall not apply to amounts paid by certain State funds 
                   as compensation for unpaid wages.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TREATMENT OF STATE FUNDS PROVIDING COMPENSATION FOR UNPAID 
              WAGES.

    (a) In General.--For purposes of subtitle C of the Internal Revenue 
Code of 1986 (relating to employment taxes) and title II of the Social 
Security Act, in the case of an individual who receives any payment 
from a State wage security fund by reason of unpaid wages, with respect 
to such payment--
            (1) such individual shall be treated as not being an 
        employee of such fund, and
            (2) such fund shall be treated as not being an employer of 
        such individual.
    (b) Exceptions.--
            (1) Maximum benefits.--Subsection (a) shall not apply to 
        payments made to an individual in excess of the maximum amount 
        of payments permitted to be made to an individual from the fund 
        under the rules in effect on January 1, 1995.
            (2) Only compensation for unpaid wages from private 
        employers.--Subsection (a) shall not apply with respect to 
        unpaid wages attributable to services performed by the 
        individual for a State or any agency or instrumentality 
        thereof.
            (3) Withholding of income tax required.--Subsection (a) 
        shall not apply for purposes of chapter 24 of the Internal 
        Revenue Code of 1986.
    (c) State Wage Security Fund.--For purposes of this section, the 
term ``State wage security fund'' means any State fund the sole purpose 
of which is to pay compensation to individuals who have performed 
services for any employer in such State but who did not receive 
compensation from such employer for such services by reason of the 
employer ceasing to exist or ceasing to operate the facility at which 
such individual was employed.
    (d) Effective Date.--The section shall apply to all periods 
beginning before, on, or after the date of the enactment of this Act; 
except that subsection (b)(3) shall apply only to amounts paid after 
the date of the enactment of this Act.
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