II 110th CONGRESS 1st Session S. 2373 IN THE SENATE OF THE UNITED STATES November 15, 2007 Mr. Salazar (for himself and Mr. Kerry) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide for residents of Puerto Rico who participate in cafeteria plans under the Puerto Rican tax laws an exclusion from employment taxes which is comparable to the exclusion that applies to cafeteria plans under such Code.

1.

Exclusion from employment taxes for residents of Puerto Rico for payments made under a cafeteria plan which are excludable from the Puerto Rican income tax

(a)

Social security taxes

(1)

In general

Paragraph (5) of section 3121(a) of the Internal Revenue Code of 1986 (defining wages) is amended by striking or at the end of subparagraph (H), by striking the semicolon at the end of subparagraph (I) and inserting , or, and by inserting after subparagraph (I) the following new subparagraph: (J)under a plan established under section 1022(l) of the Puerto Rico Internal Revenue Code of 1994 if such payment would not be treated as wages without regard to such plan and it would be reasonable to believe that (if such section 1022(l) applied for purposes of this section) such section 1022(l) would not treat any wages as constructively received; . (2)

Social security act

Paragraph (4) of section 209(a) of the Social Security Act (defining wages) is amended by adding at the end the following: or (L) under a plan established under section 1022(l) of the Puerto Rico Internal Revenue Code of 1994 if such payment would not be treated as wages without regard to such plan and it would be reasonable to believe that (if such section 1022(l) applied for purposes of this section) such section 1022(l) would not treat any wages as constructively received;. (b)

Unemployment insurance

Paragraph (5) of section 3306(b) of such Code (defining wages) is amended by striking or at the end of subparagraph (G), by adding or at the end of subparagraph (H), and by inserting after subparagraph (H) the following new subparagraph: (I)under a plan established under section 1022(l) of the Puerto Rico Internal Revenue Code of 1994 if such payment would not be treated as wages without regard to such plan and it would be reasonable to believe that (if such section 1022(l) applied for purposes of this section) such section 1022(l) would not treat any wages as constructively received; . (c)

Effective date

The amendments made by this section shall apply to remuneration paid after the date of the enactment of this Act.