[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2962 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2962
To reduce employer taxes and simplify tax filing, to reform the
administrative funding of the unemployment compensation and employment
service programs, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 25, 2001
Mr. McCrery introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To reduce employer taxes and simplify tax filing, to reform the
administrative funding of the unemployment compensation and employment
service programs, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Employment
Security Reform Act of 2001''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--TAX PROVISIONS
Sec. 101. Repeal of surtax.
Sec. 102. Reduced rate.
Sec. 103. Disclosure of tax information to facilitate combined
employment tax reporting.
Sec. 104. Quarterly payment of unemployment taxes.
TITLE II--BENEFIT PROVISIONS
Sec. 201. Repeal of certain State law extended benefit requirements.
Sec. 202. Effective date.
TITLE III--ADMINISTRATIVE PROVISIONS
Sec. 301. Funding for administration of State unemployment
compensation, State systems of public
employment offices and veterans employment
service programs.
Sec. 302. Transitional funding of administrative costs through the Reed
Act.
TITLE IV--MISCELLANEOUS PROVISIONS
Sec. 401. Adjustment to Federal unemployment account ceiling.
Sec. 402. Repeal of special rules for State Reed Act appropriations.
Sec. 403. Repeal of special conditions on recent Reed Act
distributions.
Sec. 404. State use of compensating balances and interest earned on
clearing account to pay associated banking
costs.
Sec. 405. Treatment of short-time compensation programs.
Sec. 406. Method of verifying citizenship status for unemployment
benefits.
Sec. 407. Use of new hire information to assist in administration of
unemployment compensation programs.
TITLE I--TAX PROVISIONS
SEC. 101. REPEAL OF SURTAX.
(a) Tax Rate.--Section 3301 of the Internal Revenue Code of 1986 is
amended--
(1) in paragraph (1), by striking ``2007'' and inserting
``2001''; and
(2) in paragraph (2), by striking ``2008'' and inserting
``2002''.
(b) Conforming Amendment.--
(1) Transfers to euca.--Section 905(b)(1) of the Social
Security Act (42 U.S.C. 1105(b)(1)) is amended by striking ``20
percent'' and inserting ``10 percent''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on January 1, 2002.
SEC. 102. REDUCED RATE.
(a) Definition.--Paragraph (8) of section 3303(c) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(8) Reduced rate.--The term `reduced rate' means a rate
of contributions of less than 5.4 percent.''.
(b) Conforming Amendment.--Section 3302(b) of the Internal Revenue
Code of 1986 is amended by striking all that follows ``State law'' and
inserting ``to a rate of 5.4 percent.''.
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 2002.
SEC. 103. DISCLOSURE OF TAX INFORMATION TO FACILITATE COMBINED
EMPLOYMENT TAX REPORTING.
Paragraph (5) of section 6103(d) of the Internal Revenue Code of
1986 is amended to read as follows:
``(5) Disclosure for combined employment tax reporting.--
The Secretary may disclose taxpayer identities and signatures
to any agency, body, or commission of any State for the purpose
of carrying out with such agency, body, or commission a
combined Federal and State employment tax reporting program
approved by the Secretary. Subsections (a)(2) and (p)(4) and
sections 7213 and 7213A shall not apply with respect to
disclosures or inspections made pursuant to this paragraph.''.
SEC. 104. QUARTERLY PAYMENT OF UNEMPLOYMENT TAXES.
(a) General Rule.--Section 6157(a) of the Internal Revenue Code of
1986 is amended by striking in the last sentence all that follows
``subsection (c),'' and inserting ``be due and payable not more often
than on the last day of the first calendar month following the close of
the preceding calendar quarter and shall be paid in such a manner as
may be provided in regulations prescribed by the Secretary.''.
(b) State Law Requirement.--
(1) In general.--Section 303(a) of the Social Security Act
(42 U.S.C. 503(a)) is amended--
(A) in paragraph (10), by striking the period and
inserting ``; and''; and
(B) by adding at the end the following new
paragraph:
``(11) A requirement that contributions to unemployment
funds for a calendar quarter be due and payable on the last day
of the first calendar month following the close of such
quarter, except--
``(A) for payments in lieu of contributions
described in section 3304(a)(6)(B) of the Internal
Revenue Code of 1986, and
``(B) as otherwise provided in sections 3510 and
6157(c) of such Code.''.
(2) Effective date.--The amendments made by this subsection
shall take effect on the first day of the first calendar year
beginning more than 2 years after the date of the enactment of
this Act.
TITLE II--BENEFIT PROVISIONS
SEC. 201. REPEAL OF CERTAIN STATE LAW EXTENDED BENEFIT REQUIREMENTS.
Section 202 of the Federal-State Extended Unemployment Compensation
Act of 1970 is amended--
(1) in subsection (a), by striking paragraphs (3) through
(7); and
(2) by striking subsection (c).
SEC. 202. EFFECTIVE DATE.
The amendments made by this title shall apply to weeks of
unemployment beginning after June 30, 2003.
TITLE III--ADMINISTRATIVE PROVISIONS
SEC. 301. FUNDING FOR ADMINISTRATION OF STATE UNEMPLOYMENT
COMPENSATION, STATE SYSTEMS OF PUBLIC EMPLOYMENT OFFICES
AND VETERANS EMPLOYMENT SERVICE PROGRAMS.
(a) In General.--Paragraph (1) of section 901(c) of the Social
Security Act (42 U.S.C. 1101(c)(1)) is amended by striking all that
precedes clause (i) of subparagraph (B) and inserting the following:
``(c)(1)(A) There are hereby appropriated out of the employment
security administration account for each fiscal year--
``(i) the amount determined under subsection (g) for such
year for assisting the States in the administration of their
unemployment compensation laws as provided in title III
(including administration pursuant to agreements under any
Federal unemployment compensation law),
``(ii) the amount determined under subsection (h) for such
year for providing reemployment services, including
administering the work test for the State unemployment
compensation system and providing job finding and placement
services, to unemployment compensation claimants,
``(iii) the amount determined under subsection (i) for such
year for the establishment and maintenance of systems of public
employment offices in accordance with the Wagner-Peyser Act (29
U.S.C. 49 et seq.), and
``(iv) the amounts determined under sections 4103A(a)(1)
and 4104(a)(1) of title 38 of the United States Code for such
year for carrying out sections 4103A and 4104 of such title,
respectively.
The Secretary of Labor may reserve not more than 0.4 percent of the
funds appropriated under clauses (i) and (ii), respectively, for any
fiscal year to carry out national activities that benefit the Federal-
State unemployment compensation system as a whole, are interstate or
multistate in nature, or are more efficiently and effectively performed
on a centralized basis.
``(B) There are hereby authorized to be made available for
expenditure out of the employment security administration account for
each fiscal year such amounts (not in excess of the limit provided by
paragraph (4) with respect to clause (iii)) as the Congress may deem
appropriate for the necessary expenses of the Department of Labor for
the performance of its functions under--''.
(b) Funding Formulas.--Section 901 of the Social Security Act (42
U.S.C. 1101) is amended by adding at the end the following:
``Amounts Appropriated for Administrative Costs of State Unemployment
Compensation Programs
``(g)(1) For fiscal year 2002 and each fiscal year thereafter, the
amount appropriated for funding costs of administering State
unemployment compensation programs under subsection (c)(1)(A)(i), shall
be the sum of--
``(A)(i) the amount determined under this clause for the
prior fiscal year (except that in determining funding for
fiscal year 2003, the amount for the prior fiscal year shall
equal $789) multiplied by the projected change in the gross
domestic product price index for the fiscal year for which the
determination is being made, multiplied by
``(ii) the projected average weekly number of individuals
filing claims for compensation (within the meaning of section
85(b) of the Internal Revenue Code of 1986) for such fiscal
year, except that an individual shall not be included in such
number solely by reason of filing a claim for assistance under
section 410(a) of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5177(a)); and
``(B)(i) the amount determined under this clause for the
prior fiscal year (except that in determining the funding for
fiscal year 2003, the amount for the prior fiscal year shall
equal $138) multiplied by the projected change in the gross
domestic product price index for the fiscal year for which the
determination is being made, multiplied by
``(ii) the average quarterly number of employers subject to
State unemployment compensation laws projected for such fiscal
year.
``(2) In addition to the amounts determined under paragraph (1) for
a fiscal year, if the weekly average of insured unemployed individuals
for such fiscal year (as projected using the economic assumptions
released by the President during such fiscal year under section 1106 of
title 31, United States Code, and excluding the same claimants as are
excluded under paragraph (1)(A)(ii)) exceeds the projection used in
such paragraph (1)(A)(ii), then additional amounts shall be
appropriated under subsection (c)(1)(A)(i) for funding the costs of
administering the State unemployment compensation programs equal to--
``(A)(i) the amount determined under this subparagraph for
the prior fiscal year (except that in determining funding for
fiscal year 2003, the amount for the prior fiscal year shall
equal $298) multiplied by the projected change in the gross
domestic product price index for the fiscal year for which the
determination is being made, multiplied by
``(ii) the difference between the weekly average of insured
unemployed individuals (as measured using the most recent
economic assumptions released by the President during such
fiscal year) and the weekly average of insured unemployed
individuals projected under paragraph (1)(A)(ii) for such
fiscal year.
The additional amounts made available pursuant to this paragraph for a
fiscal year shall be available to be allocated to the States only to
the extent that the projected weekly average of insured unemployed
individuals for such fiscal year, as referred to in the preceding
sentence (in the matter preceding subparagraph (A)) exceeds the
projection used in paragraph (1)(A)(ii).
``Amounts Appropriated to States for the Provision of Reemployment
Services
``(h) For fiscal year 2003 and each fiscal year thereafter, the
amount appropriated for funding costs of providing reemployment
services to unemployment compensation claimants under subsection
(c)(1)(A)(ii) shall be--
``(1) the amount determined under this paragraph for the
prior fiscal year (except that in determining funding for
fiscal year 2003, the amount for the prior fiscal year shall
equal $11.10) multiplied by the projected change in the gross
domestic product price index for the fiscal year for which the
determination is being made, multiplied by
``(2) the projected number of payments of unemployment
compensation representing first weeks compensated in a benefit
year for such fiscal year.
``Amounts Appropriated for Administration of State Public Employment
Offices
``(i) For fiscal year 2003 and each fiscal year thereafter, the
amount appropriated for funding the costs of administering the State
system of public employment offices under subsection (c)(1)(A)(iii)
shall be--
``(1) the amount determined under this paragraph for the
prior fiscal year (except that in determining funding for
fiscal year 2003, the amount for the prior fiscal year shall
equal $7.30) multiplied by the projected change in the gross
domestic product price index for the fiscal year for which the
determination is being made, multiplied by
``(2) the projected average monthly number of individuals
in the civilian labor force for such fiscal year.
``Calculation of Appropriated Amounts by the Secretary of Labor
``(j) For purposes of subsections (g), (h) and (i)--
``(1) each projection shall be made by the Secretary of
Labor using the economic assumptions released by the President
for such fiscal year, during the preceding fiscal year, under
section 1106 of title 31, United States Code, except as
otherwise provided under subsection (g)(2) or (h)(2), and
``(2) the projected change in the gross domestic product
price index for the fiscal year for which the determination is
being made shall equal the sum of 1 and the quotient of the
percent change in the gross domestic product price index
projected for such fiscal year divided by 100.
``Special Rules Relating to Use of Amounts Appropriated
``(k)(1) Amounts appropriated under paragraphs (1)(A)(i)-(ii) and
(6) of subsection (c) with respect to a fiscal year shall remain
available for obligation by the States during such fiscal year and the
first quarter of the following fiscal year, except that funds used for
automation acquisitions shall remain available for obligation by the
States through the end of the second fiscal year following the fiscal
year in which such funds are appropriated.
``(2) Amounts reserved by the Secretary of Labor under the second
sentence of subsection (c)(1)(A) may be obligated in contracts, grants,
or agreements with non-State entities.
``(3) Amounts appropriated under paragraph (1)(A) and paragraph (6)
of subsection (c) may be used by the States to fund integrated
employment service and unemployment compensation automation efforts
notwithstanding the cost allocation principles prescribed under Office
of Management and Budget Circular No. A-87.''.
(c) Funding for Improved Technology To Assist in Determining
Benefit Eligibility.--Section 901(c) of the Social Security Act (42
U.S.C. 1101(c)) is amended by adding at the end the following new
paragraph:
``(6) In addition to amounts provided under paragraph (1)(A)(i)-
(ii), there is hereby appropriated out of the employment security
administration account $60,000,000 for fiscal year 2002 for the purpose
of assisting States in funding technology and other costs that
accelerate access to wage and employment information in order to
determine eligibility for unemployment compensation.''.
(d) Conforming Amendments.--
(1) Payments to states for reemployment services.--Section
302 of the Social Security Act (42 U.S.C. 502) is amended by
adding at the end the following:
``(d) The Secretary of Labor shall from time to time certify to the
Secretary of the Treasury for payment to each State such amounts as the
Secretary of Labor determines appropriate for providing reemployment
services, including administering the work test for the State
unemployment compensation system and providing job finding and
placement services, to claimants for unemployment compensation.''.
(2) Expenditure of funds for reemployment services.--
Section 303(a)(8) of the Social Security Act (42 U.S.C.
503(a)(8)) is amended--
(A) by inserting ``subsections (a) and (b) of''
after ``pursuant to''; and
(B) by inserting before the semicolon at the end
the following: ``and the expenditure of all moneys
received pursuant to section 302(d) of this title
solely for the purposes and in the amounts found
necessary by the Secretary of Labor for providing
reemployment services to claimants for unemployment
compensation''.
(3) Replenishment of funds not used for reemployment
services.--Section 303(a)(9) of the Social Security Act (42
U.S.C. 503(a)(9)) is amended--
(A) by inserting ``subsections (a) and (b) of''
after ``pursuant to''; and
(B) by inserting before the semicolon at the end
the following: ``and the replacement, within a
reasonable time, of any moneys received pursuant to
section 302(d) of this title which, because of any
action or contingency, have been lost or have been
expended for purposes other than, or in amounts in
excess of, those found necessary by the Secretary of
Labor for providing reemployment services to claimants
for unemployment compensation''.
(4) Repeals.--The following provisions of the Social
Security Act are repealed:
(A) Paragraph (3) of section 901(c).
(B) The second sentence of section 901(f)(3)(A).
(5) Amount of authorization under the wagner-peyser act.--
(A) Section 901(c)(4) of the Social Security Act
(42 U.S.C. 1101(c)(4)) is amended--
(i) by striking ``paragraphs (1)(A)(ii)
and'' and inserting ``paragraph'';
(ii) by striking ``the proportion of the
total cost of administering the system of
public employment offices in accordance with
the Act of June 6, 1933, as amended, and of'';
and
(iii) by striking the last sentence.
(B) Section 901(c)(1)(B) of the Social Security Act
(42 U.S.C. 1101(c)(1)(B)) is amended by moving clauses
(i) through (v) 2 ems to the left, and by striking
clause (iii) and inserting the following:
``(iii) the Wagner-Peyser Act (29 U.S.C. 49 et seq.),''.
(6) Repeal of additional appropriations for fiscal year
2002.--Section 901(c)(5)(A) of the Social Security Act (42
U.S.C. 1101(c)(5)(A)) is amended--
(A) in clause (iii), by inserting ``and'' after the
semicolon at the end;
(B) in clause (iv), by striking the semicolon and
inserting a period; and
(C) by striking clause (v).
(7) Appropriation reference in the wagner-peyser act.--
Section 5 of the Wagner-Peyser Act (29 U.S.C. 49d) is amended--
(A) by striking subsection (a) and inserting the
following:
``(a) The amounts available to carry out sections 1 through 13 of
this Act shall be appropriated in accordance with section 901 of the
Social Security Act.'';
(B) by striking subsection (b); and
(C) by redesignating subsection (c) as subsection
(b).
(e) Budget Justification.--No funds may be expended under the
amendments made by this section unless the Secretary of Labor includes
in the Department of Labor's annual budget justification to Congress a
detailed description of the specific activities for which the funds
made available by such amendments have been used in the prior and
current years (if applicable) and the activities and costs planned for
the budget year.
(f) Effective Date.--Except as provided in subsection (d)(6), the
amendments made by this section shall apply to fiscal year 2003 and
subsequent fiscal years.
SEC. 302. TRANSITIONAL FUNDING OF ADMINISTRATIVE COSTS THROUGH THE REED
ACT.
(a) In General.--Paragraph (3) of section 903(a) of the Social
Security Act (42 U.S.C. 1103(a)(3)) is amended to read as follows:
``(3)(A) Notwithstanding any other provision of this section, for
purposes of carrying out this subsection with respect to any excess
amount (referred to in paragraph (1)) remaining in the employment
security administration account as of the close of fiscal year 2001,
the resulting amount to be transferred to the accounts of the States at
the beginning of the succeeding fiscal year shall not exceed
$1,071,000,000 for amounts to be transferred at the beginning of fiscal
year 2002 (based on amounts remaining at the close of fiscal year
2001), of which--
``(i) $660,000,000 may be used to pay expenses incurred by
the States in the administration of their unemployment
compensation laws,
``(ii) $93,000,000 may be used for the purpose of providing
reemployment services to claimants for unemployment
compensation, and
``(iii) $318,000,000 may be used to pay expenses incurred
by a State for the administration of its public employment
offices.
``(B) Paragraphs (1) and (2) shall apply with respect to any
amounts described in subparagraph (A), except that in carrying out the
provisions of paragraph (2)(B) with respect to such amounts (to
determine the portion of such amounts which is to be allocated to a
State for a succeeding fiscal year), the ratios, as determined by the
Secretary of Labor, to be applied under such provisions shall--
``(i) with respect to amounts referred to in clauses (i)
and (ii) of subparagraph (A), be the same as the ratio that--
``(I) the amount of funds to be allocated to such
State for such fiscal year pursuant to the base
allocation formula under title III, bears to
``(II) the total amount of funds to be allocated to
all States for such fiscal year pursuant to the base
allocation formula under title III, and
``(ii) with respect to amounts referred to in clause (iii)
of subparagraph (A), be the same as the ratio that--
``(I) the amount allocated to a State under section
6 of the Wagner-Peyser Act (29 U.S.C. 49e) for the
period beginning on July 1, 2001 and ending on June 30,
2002, bears to
``(II) the total amount allocated to all States
under section 6 of that Act for such period.
Nothing in this paragraph shall preclude the application of subsection
(b) of this section with respect to any allocation determined under
this subparagraph.
``(C) Any amounts in excess of those described in subparagraph (A)
(remaining in the employment security administration account as of the
close of any fiscal year specified in such subparagraph) shall, as of
the beginning of the succeeding fiscal year, accrue to the Federal
unemployment account.''.
(b) Conforming Amendment.--The last sentence of paragraph (2) of
section 903(c) of such Act (42 U.S.C. 1103(c)(2)) is amended by
striking ``to pay expenses incurred by it for the administration of its
unemployment compensation law'' and inserting ``to pay costs of
administration in the amounts and for the purposes described in
subsection (a)(3)(A)''.
TITLE IV--MISCELLANEOUS PROVISIONS
SEC. 401. ADJUSTMENT TO FEDERAL UNEMPLOYMENT ACCOUNT CEILING.
(a) In General.--Paragraph (2) of Section 902(a) of the Social
Security Act (42 U.S.C. 1102(a)) is amended to read as follows:
``(2)(A) for fiscal year 2002, the amount (determined by
the Secretary of Labor and certified by such Secretary to the
Secretary of the Treasury) equal to the difference between--
``(i) 0.5 percent of the total wages subject
(determined without any limitation on amount) to
contributions under all State unemployment compensation
laws for the calendar year ending during the fiscal
year for which the excess is determined, and
``(ii) $620,000,000;
``(B) except as provided in subparagraph (C), for each
subsequent fiscal year, the amount (determined by the Secretary
of Labor and certified by such Secretary to the Secretary of
the Treasury) equal to the difference between--
``(i) the amount determined under subparagraph (A)
or this subparagraph for the prior fiscal year, and
``(ii) $620,000,000; and
``(C) if, for any fiscal year, the amount (determined by
the Secretary of Labor and certified by such Secretary to the
Secretary of the Treasury under subparagraph (B)) does not
exceed 0.25 percent of the total wages (determined without any
limitation on amount) subject to contributions under all State
unemployment compensation laws for the calendar year ending
during the fiscal year for which the excess is determined, the
amount for that fiscal year and each subsequent fiscal year
shall be equal to 0.25 percent of such total wages for the
calendar year during the fiscal year ending for which the
excess is determined.''.
(b) Transfers Due To Lowering of Federal Unemployment Account
Ceiling.--Section 902 of the Social Security Act (42 U.S.C. 1102) is
amended by adding at the end the following:
``Transfers to the Accounts of the States
``(d)(1) For fiscal year 2002, $620,000,000 shall be transferred to
the accounts of the States in the Unemployment Trust Fund at the
beginning of the following fiscal year.
``(2) Unless subsection (a)(2)(C) applies, for fiscal year 2003 and
each subsequent fiscal year, a portion of any amounts to be transferred
under subsection (b) shall be set aside for transfer to the accounts of
the States in the Unemployment Trust Fund at the beginning of the
following fiscal year. Such portion, not to exceed the amount
determined under subsection (b), shall equal the difference between--
``(A) the amount determined under subsection (a)(2)(B) for
the fiscal year preceding the year for which the portion is
being determined multiplied by the quotient of--
``(i) the total wages subject (determined without
any limitation on amount) to contributions under all
State unemployment compensation laws for the preceding
calendar year, divided by
``(ii) the total wages subject (determined without
any limitation on amount) to contributions under all
State unemployment compensation laws for the second
preceding calendar year; and
``(B) the amount determined under subsection (a)(2)(B) for
the fiscal year for which the portion is being determined.
``(3)(A) Each State's share of the funds to be transferred under
this subsection at the beginning of any fiscal year shall be determined
by the Secretary of Labor and certified by such Secretary to the
Secretary of the Treasury before such year and shall equal the amount
determined under subparagraph (B).
``(B)(i) Subject to clause (ii), the amount determined under this
subparagraph is the sum of--
``(I) $5,000,000, and
``(II) with respect to any remaining amount, the State's
share of such amount shall bear the same ratio to the remaining
amount to be so transferred as the number of initial claims
filed in the State during the preceding calendar year bears to
the total number of initial claims filed during such year.
``(ii) If the amount to be transferred is insufficient to provide
$5,000,000 to each State, then the share of each State shall be
determined by using the ratio established by clause (i)(II).
``(4) If either of the circumstances described in section 903(b)
exists, any amounts that would otherwise be available for transfer
under this subsection to a State's account shall instead be retained in
the Federal unemployment account, subject to the same conditions as
described in paragraph (1) or (2) of such section (as appropriate).''.
SEC. 402. REPEAL OF SPECIAL RULES FOR STATE REED ACT APPROPRIATIONS.
Section 903(c)(2) of the Social Security Act (42 U.S.C. 1103(c)(2))
is amended--
(1) by striking ``if and only if--'' and inserting a
period; and
(2) by striking subparagraphs (A) through (E).
SEC. 403. REPEAL OF SPECIAL CONDITIONS ON RECENT REED ACT
DISTRIBUTIONS.
(a) In General.--Section 903(a) of the Social Security Act (42
U.S.C. 1103(a)) is amended by striking paragraph (3).
(b) Use of Funds.--Section 903(c)(2) of the Social Security Act (42
U.S.C. 1103(c)(2)), as amended by section 302(b), is amended by
striking the last sentence.
(c) Effective Date.--The amendments made by this section shall take
effect on October 1, 2002.
SEC. 404. STATE USE OF COMPENSATING BALANCES AND INTEREST EARNED ON
CLEARING ACCOUNT TO PAY ASSOCIATED BANKING COSTS.
(a) Immediate Deposit Requirement.--
(1) Social security act requirement.--Paragraph (4) of
section 303(a) of the Social Security Act (42 U.S.C. 503(a)) is
amended to read as follows:
``(4) The payment of all money received in the unemployment
fund of such State, immediately upon receipt, to the Secretary
of the Treasury to the credit of the Unemployment Trust Fund
established by section 904, except for--
``(A) refunds of sums erroneously paid into such
fund;
``(B) refunds paid in accordance with the
provisions of section 3305(b) of the Federal
Unemployment Tax Act; and
``(C) such portion of the money as may be necessary
to generate earnings credit or actual interest earnings
sufficient to pay reasonable charges for banking
services and for services provided by a bank in
connection with the receipt and processing of direct
remittances from employers; and''.
(2) Federal unemployment tax act requirement.--Paragraph
(3) of section 3304(a) of the Internal Revenue Code of 1986 is
amended to read as follows:
``(3) all money received in the unemployment fund shall
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, except
for--
``(A) refunds of sums erroneously paid into such
fund;
``(B) refunds paid in accordance with the
provisions of section 3305(b); and
``(C) such portion of the money as may be necessary
to generate earnings credit or actual interest earnings
sufficient to pay reasonable charges for banking
services and for services provided by a bank in
connection with the receipt and processing of direct
remittances from employers;''.
(b) Withdrawal Standard.--
(1) Social security act requirement.--Section 303(a)(5) of
the Social Security Act (42 U.S.C. 503(a)(5)) is amended by
inserting before the semicolon at the end the following: ``:
Provided further, That earnings credit or actual interest
earnings on money not immediately paid to the Secretary of the
Treasury pursuant to paragraph (4) may be used to pay
reasonable charges for banking services and for services
provided by a bank in connection with the receipt and
processing of direct remittances from employers''.
(2) Federal unemployment tax act requirement.--Section
3304(a)(4) of the Internal Revenue Code of 1986 is amended--
(A) in subparagraph (E), by striking ``and'' at the
end;
(B) in subparagraph (F), by adding ``and'' at the
end; and
(C) by adding at the end the following new
subparagraph:
``(G) earnings credit or actual interest earnings
on money not immediately paid to the Secretary of the
Treasury pursuant to paragraph (3) may be used to pay
reasonable charges for banking services and for
services provided by a bank in connection with the
receipt and processing of direct remittances from
employers;''.
(c) Unemployment Fund.--Section 3306(f) of the Internal Revenue
Code of 1986 is amended--
(1) in the first paragraph (5), by striking ``and'' at the
end;
(2)(A) by redesignating the second paragraph (5) as
paragraph (6); and
(B) by striking the period at the end of paragraph (6) (as
so redesignated) and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(7) earnings credit or actual interest earnings may be
used to pay reasonable charges for banking services and for
services provided by a bank in connection with the receipt and
processing of direct remittances from employers.''.
(d) Conforming Amendment.--Section 1201(a)(3)(B) of the Social
Security Act (42 U.S.C.1321(a)(3)(B)) is amended by inserting after
``month,'' the following: ``except that such amount shall not include
earnings credit or actual interest earnings used to pay reasonable
charges for banking services and for services provided by a bank in
connection with the receipt and processing of direct remittances from
employers pursuant to the exceptions in paragraphs (4) and (5) of
section 303 and paragraphs (3) and (4) of section 3304(a) of the
Federal Unemployment Tax Act,''.
SEC. 405. TREATMENT OF SHORT-TIME COMPENSATION PROGRAMS.
(a) General Rule.--Section 3306 of the Internal Revenue Code of
1986 is amended by adding at the end the following new subsection:
``(v) Short-Time Compensation Program.--For purposes of this
chapter, the term `short-time compensation program' means a program
under which--
``(1) the participation of an employer is voluntary;
``(2) an employer reduces the number of hours worked by
employees in lieu of temporary layoffs;
``(3) such employees whose workweeks have been reduced by
at least 10 percent are eligible for unemployment compensation;
``(4) the amount of unemployment compensation payable to
any such employee is a pro rata portion of the unemployment
compensation which would be payable to the employee if such
employee were totally unemployed;
``(5) such employees are not required to meet the
availability for work or work search test requirements while
collecting short-time compensation benefits, but are required
to be available for their normal workweek;
``(6) eligible employees may participate in an employer-
sponsored training program to enhance job skills if such
program has been approved by the State agency;
``(7) the State agency may require an employer to continue
to provide health benefits, and retirement benefits under a
defined benefit pension plan (as defined in section 414(j)) to
any employee whose workweek is reduced pursuant to the program
as though the workweek of such employee had not been reduced;
and
``(8) the State agency may require an employer (or an
employers' association which is party to a collective
bargaining agreement) to submit a written plan describing the
manner in which the requirements of this subsection will be
implemented and containing such other information as the
Secretary of Labor determines is appropriate.''.
(b) Conforming Amendments.--
(1) Withdrawal of amounts from the state unemployment
fund.--Subparagraph (E) of section 3304(a)(4) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(E) amounts may be withdrawn for the payment of
short-time compensation under a short-time compensation
program (as defined under section 3306(v));''.
(2) Unemployment fund defined.--Paragraph (5) of section
3306(f) of such Code, as amended by section 404(c)(1), is
amended to read as follows:
``(5) amounts may be withdrawn for the payment of short-
time compensation under a short-time compensation program (as
defined in subsection (v)); and''.
(3) Provisions of state laws.--Section 303(a)(5) of the
Social Security Act (42 U.S.C. 503(a)(5)) is amended by
striking ``the payment of short-time compensation under a plan
approved by the Secretary of Labor'' and inserting ``the
payment of short-time compensation under a short-time
compensation program (as defined in section 3306(v) of the
Internal Revenue Code of 1986)''.
SEC. 406. METHOD OF VERIFYING CITIZENSHIP STATUS FOR UNEMPLOYMENT
BENEFITS.
Nothing in Federal law shall be construed to require applicants for
unemployment benefits to present proof of citizenship or alien status
in person.
SEC. 407. USE OF NEW HIRE INFORMATION TO ASSIST IN ADMINISTRATION OF
UNEMPLOYMENT COMPENSATION PROGRAMS.
Section 453(j) of the Social Security Act (42 U.S.C. 653(j)) is
amended by adding at the end the following new paragraph:
``(7) Information comparisons and disclosure to assist in
administration of unemployment compensation programs.--
``(A) In general.--If a State agency responsible
for the administration of an unemployment compensation
program under Federal or State law transmits to the
Secretary the name and social security account number
of an individual, the Secretary shall, if the
information in the National Directory of New Hires
indicates that the individual may be employed, disclose
to the State agency the name and address of any
putative employer of the individual and the quarterly
wages reported for such individual, subject to this
paragraph.
``(B) Condition on disclosure.--The Secretary shall
make a disclosure under subparagraph (A) only to the
extent that the Secretary determines that the
disclosure would not interfere with the effective
operation of the program under this part.
``(C) Use of information.--A State agency may use
information provided under this paragraph only for
purposes of administering a program referred to in
subparagraph (A).''.