[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7314 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 7314

To amend the Internal Revenue Code of 1986 to provide tax relief to the 
                  unemployed, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 9, 2008

 Mr. Michaud 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 tax relief to the 
                  unemployed, 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.

    This Act may be cited as the ``Workforce Fairness and Tax Relief 
Act of 2008''.

SEC. 2. REPEAL OF TAX ON UNEMPLOYMENT COMPENSATION.

    (a) In General.--Section 85 of the Internal Revenue Code of 1986 is 
hereby repealed.
    (b) Conforming Amendments.--
            (1) Subsection (p) of section 3402 of such Code is amended 
        by striking paragraph (2) and by redesignating paragraph (3) as 
        paragraph (2).
            (2) Section 6050B of such Code (relating to returns 
        relating to unemployment compensation) is hereby repealed.
            (3) The table of sections for part II of subchapter B of 
        chapter 1 of such Code is amended by striking the item relating 
        to section 85.
            (4) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 of such Code is amended by striking 
        the item relating to section 6050B.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts received after December 31, 2008.

SEC. 3. UNLIMITED PENALTY-FREE DISTRIBUTIONS FROM QUALIFIED RETIREMENT 
              PLANS TO INDIVIDUALS AFTER SEPARATION FROM EMPLOYMENT.

    (a) Unlimited Penalty-Free Distributions to Unemployed 
Individuals.--Clause (i) of section 72(t)(2)(D) of the Internal Revenue 
Code of 1986 is amended to read as follows:
                            ``(i) In general.--Distributions from a 
                        qualified retirement plan to an individual 
                        after separation from employment if--
                                    ``(I) the individual has received 
                                unemployment compensation for 12 
                                consecutive weeks under any Federal or 
                                State unemployment compensation law by 
                                reason of such separation; and
                                    ``(II) such distributions are made 
                                during any taxable year during which 
                                such unemployment compensation is paid 
                                or the succeeding taxable year.''.
    (b) Conforming Amendment.--Subparagraph (D) of section 72(t)(2) of 
such Code is amended in the heading by striking ``for health insurance 
premiums''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 2008.

SEC. 4. LIMITED EXCLUSION FROM INCOME OF EMPLOYMENT SEVERANCE PAYMENTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139B the following new section:

``SEC. 139C. CERTAIN EMPLOYMENT SEVERANCE PAYMENTS.

    ``(a) In General.--Gross income shall not include amounts received 
by an employee (or former employee) from an employer solely in 
connection with a termination of employment if such amount is received 
in cash contemporaneously with such termination.
    ``(b) Limitation.--If the amount which would (but for this 
subsection) be excluded from gross income under subsection (a) in 
connection with any termination of employment exceeds $10,000, such 
amount shall be reduced (but not below zero) by an amount which bears 
the same proportion to such amount as--
            ``(1) the excess of--
                    ``(A) such amount, over
                    ``(B) $10,000, bears to
            ``(2) $10,000.
    ``(c) Employment Taxes.--Amounts excluded from gross income under 
subsection (a) shall not be taken into account as wages for purposes of 
chapters 21, 22, 23, 23A, and 24.''.
    (b) Social Security Trust Funds Held Harmless.--There is hereby 
appropriated (out of any money in the Treasury not otherwise 
appropriated) for each fiscal year to each fund under the Social 
Security Act an amount equal to the reduction in the transfers to such 
fund for such fiscal year by reason of the amendment made by subsection 
(a).
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by inserting after 
the item relating to section 139B the following new item:

``Sec. 139C. Certain employment severance payments.''.
    (d) Effective Date.--The amendment made by this section shall apply 
to amounts received after December 31, 2008.

SEC. 5. INCREASE IN CREDIT AMOUNT OF HEALTH INSURANCE COSTS OF ELIGIBLE 
              INDIVIDUALS.

    (a) In General.--Subsection (a) of section 35 of the Internal 
Revenue Code of 1986 is amended by striking ``65 percent'' and 
inserting ``100 percent''.
    (b) Conforming Amendment.--Section 7527(b) of such Code is amended 
by striking ``65 percent of''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments made after December 31, 2008.
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