I 111th CONGRESS 1st Session H. R. 1312 IN THE HOUSE OF REPRESENTATIVES March 4, 2009 Mr. Paul 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 exclude from Federal tax certain payments made in connection with reductions in force.

1.

Short title

This Act may be cited as the Unemployed Tax Relief Act of 2009.

2.

Exclusion from income for payments in connection with reductions in force

(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:

139C.

Payments in connection with reductions in force

(a)

In general

In the case of an individual who is separated from employment as a result of a reduction in force of the employer, gross income shall not include— (1)the last regular payment of wages (as defined in section 3121) or compensation (as defined in section 3231), as the case may be, for service performed before such separation, and (2)any severance amount received in connection with such separation. (b)

Employment taxes

Amounts excluded from gross income under subsection (a) shall not be taken into account as wages for purposes of subtitle C. (c)

Severance amount

For purposes of this section, severance amount includes— (1)any amount based on months of service which is not in the nature of retirement, (2)any amount in lieu of unused vacation time or sick leave, (3)any amount in lieu of a required notice period, and (4)any stock option offered as part of a severance package.

. (b)

Trust funds held harmless

There is hereby appropriated (out of any money in the Treasury not otherwise appropriated) for each fiscal year to each employment-related fund 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). For purposes of the preceding sentence, the term employment-related fund means a fund the contributions to which are determined in relation to taxes imposed under subtitle C of the Internal Revenue Code of 1986. (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. Payments in connection with reductions in force. . (d)

Effective date

The amendment made by this section shall apply to amounts received after December 31, 2007.