26 U.S.C. § 3305 — Applicability of State law

Page 2807 TITLE 26—INTERNAL REVENUE CODE § 3305 part that the deletion of ‘‘the Virgin Islands or’’ from section 202(a)(1) of Pub. L. 91–373, set out above, and the insertion of ‘‘and the Virgin Islands’’ in section 205(8) thereof shall take effect on the later of Oct. 1, 1976, or the day after the day on which the Secretary of Labor approves under section 3304(a) of this title an unem- ployment compensation law submitted to him by the Virgin Islands for approval.] [Pub. L. 94–566, title II, § 212(b), Oct. 20, 1976, 90 Stat. 2677, provided that: ‘‘The amendment made by this sec- tion [enacting section 204(a)(4) of Pub. L. 91–373, set out above] shall apply with respect to compensation paid for weeks of unemployment beginning on or after Janu- ary 1, 1979.’’] [Pub. L. 94–566, title III, § 311(c), Oct. 20, 1976, 90 Stat. 2679, provided that: ‘‘The amendment made by sub- section (a) of this section [amending section 203(d) of Pub. L. 91–373, set out above] shall apply to weeks be- ginning after December 31, 1976, and the amendments made by subsection (b) of this section [amending sec- tion 203(e) of Pub. L. 91–373, set out above] shall apply to weeks beginning after March 30, 1977.’’] STUDY AND REPORT BY SECRETARY OF LABOR COVERING EMERGENCY UNEMPLOYMENT COMPENSATION PROGRAM AND SPECIAL UNEMPLOYMENT ASSISTANCE PROGRAM; REPORT ON OR BEFORE JAN. 1, 1977 Pub. L. 94–45, title I, § 104, June 30, 1975, 89 Stat. 238, provided that: ‘‘The Secretary of Labor shall conduct a study and review of the program established by the Emergency Unemployment Compensation Act of 1974 [Pub. L. 93–572, set out above] and the program estab- lished under title II of the Emergency Jobs and Unem- ployment Assistance Act of 1974 [Pub. L. 93–567, title II, set out above] and shall submit to the Congress not later than January 1, 1977, a report on such study and review. Such study and review shall include— ‘‘(1) the employment, economic, and demographic characteristics of individuals receiving benefits under either such program, ‘‘(2) the needs of the long-term unemployed for job counseling, testing, referral and placement services, skill and apprenticeship training, career-related edu- cation programs, and public service employment op- portunities, and ‘‘(3) an examination of all other benefits to which individuals receiving benefits under either such pro- gram are eligible together with an investigation of important factors affecting unemployment, a com- parison of the aggregate value of such other benefits plus benefits received under either such program with the amount of compensation received by such indi- viduals in their most recent position of employ- ment.’’ LOANS TO UNEMPLOYMENT FUND OF VIRGIN ISLANDS Pub. L. 94–45, title III, § 301, June 30, 1975, 89 Stat. 243, as amended by Pub. L. 94–354, July 12, 1976, 90 Stat. 888; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(a) The Secretary of Labor (hereinafter in this sec- tion referred to as the ‘Secretary’) may make loans to the Virgin Islands in such amounts as he determines to be necessary for the payment in any month of com- pensation under the unemployment compensation law of the Virgin Islands. A loan may be made under this subsection for the payment of compensation in any month only if— ‘‘(1) the Governor of the Virgin Islands submits an application therefor no earlier than the first day of the preceding month; and ‘‘(2) such application contains an estimate of the amount of the loan which will be required by the Vir- gin Islands for the payment of compensation in such month. ‘‘(b) For purposes of this section— ‘‘(1) an application for loan under subsection (a) shall be made on such forms and shall contain such information and data (fiscal and otherwise) con- cerning the operation and administration of the un- employment compensation law of the Virgin Islands as the Secretary deems necessary or relevant to the performance of his duties under this section; ‘‘(2) the amount required by the Virgin Islands for the payment of compensation in any month shall be determined with due allowance for contingencies and taking into account all other amounts that will be available in the unemployment fund of the Virgin Is- lands for the payment of compensation in such month; and ‘‘(3) the term ‘compensation’ means cash benefits payable to individuals with respect to their unem- ployment, exclusive of expenses of administration. ‘‘(c) Any loan made under subsection (a) shall be re- payable (without interest) not later than January 1, 1979. If after January 1, 1979, any portion of any such loan remains unpaid, the Virgin Islands shall pay inter- est thereon, until the loan is paid in full, at a rate equal to the rate of interest in effect under section 6621 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]. If at some future date the Federal Unemployment Tax Act [section 3301 et seq. of this title] shall be made applicable to the Virgin Islands, then, any amount of principal or interest due on any such loan remaining unpaid on such date shall be treated, for purposes of section 3302(c)(3) of the Internal Revenue Code of 1986, as an advance made to the Virgin Islands under title XII of the Social Security Act [42 U.S.C. 1321 et seq.]. ‘‘(d) No loan may be made under subsection (a) for any month beginning after September 30, 1977. The ag- gregate of the loans which may be made under sub- section (a) shall not exceed $15,000,000. ‘‘(e) There are authorized to be appropriated from the general fund of the Treasury such sums as may be nec- essary to carry out this section.’’ UNEMPLOYMENT COMPENSATION LAW OF COMMONWEALTH OF PUERTO RICO Pub. L. 86–778, title V, § 543(b), Sept. 13, 1960, 74 Stat. 986, provided that: ‘‘The unemployment compensation law of the Commonwealth of Puerto Rico shall be con- sidered as meeting the requirements of— ‘‘(1) Section 3304(a)(2) of the Federal Unemployment Tax Act [26 U.S.C. 3304(a)(2)], if such law provides that no compensation is payable with respect to any day of unemployment occurring before January 1, 1959. ‘‘(2) Section 3304(a)(3) of the Federal Unemployment Tax Act [26 U.S.C. 3304(a)(3)] and section 303(a)(4) of the Social Security Act [42 U.S.C. 503(a)(4)], if such law contains the provisions required by those sec- tions and if it requires that, on or before February 1, 1961, there be paid over to the Secretary of the Treas- ury, for credit to the Puerto Rico account in the Un- employment Trust Fund, an amount equal to the ex- cess of— ‘‘(A) the aggregate of the moneys received in the Puerto Rico unemployment fund before January 1, 1961, over ‘‘(B) the aggregate of the moneys paid from such fund before January 1, 1961, as unemployment com- pensation or as refunds of contributions erro- neously paid.’’ § 3305. Applicability of State law (a) Interstate and foreign commerce No person required under a State law to make payments to an unemployment fund shall be re- lieved from compliance therewith on the ground that he is engaged in interstate or foreign com- merce, or that the State law does not distin- guish between employees engaged in interstate or foreign commerce and those engaged in intra- state commerce. (b) Federal instrumentalities in general The legislature of any State may require any instrumentality of the United States (other Page 2808 TITLE 26—INTERNAL REVENUE CODE § 3305 than an instrumentality to which section 3306(c)(6) applies), and the individuals in its em- ploy, to make contributions to an unemploy- ment fund under a State unemployment com- pensation law approved by the Secretary of Labor under section 3304 and (except as provided in section 5240 of the Revised Statutes, as amended (12 U.S.C., sec. 484), and as modified by subsection (c)), to comply otherwise with such law. The permission granted in this subsection shall apply (A) only to the extent that no dis- crimination is made against such instrumen- tality, so that if the rate of contribution is uni- form upon all other persons subject to such law on account of having individuals in their em- ploy, and upon all employees of such persons, re- spectively, the contributions required of such instrumentality or the individuals in its employ shall not be at a greater rate than is required of such other persons and such employees, and if the rates are determined separately for different persons or classes of persons having individuals in their employ or for different classes of em- ployees, the determination shall be based solely upon unemployment experience and other fac- tors bearing a direct relation to unemployment risk; (B) only if such State law makes provision for the refund of any contributions required under such law from an instrumentality of the United States or its employees for any year in the event such State is not certified by the Sec- retary of Labor under section 3304 with respect to such year; and (C) only if such State law makes provision for the payment of unemploy- ment compensation to any employee of any such instrumentality of the United States in the same amount, on the same terms, and subject to the same conditions as unemployment com- pensation is payable to employees of other em- ployers under the State unemployment com- pensation law. (c) National banks Nothing contained in section 5240 of the Re- vised Statutes, as amended (12 U.S.C. 484), shall prevent any State from requiring any national banking association to render returns and re- ports relative to the association’s employees, their remuneration and services, to the same ex- tent that other persons are required to render like returns and reports under a State law re- quiring contributions to an unemployment fund. The Comptroller of the Currency shall, upon re- ceipt of a copy of any such return or report of a national banking association from, and upon re- quest of, any duly authorized official, body, or commission of a State, cause an examination of the correctness of such return or report to be made at the time of the next succeeding exam- ination of such association, and shall thereupon transmit to such official, body, or commission a complete statement of his findings respecting the accuracy of such returns or reports. (d) Federal property No person shall be relieved from compliance with a State unemployment compensation law on the ground that services were performed on land or premises owned, held, or possessed by the United States, and any State shall have full jurisdiction and power to enforce the provisions of such law to the same extent and with the same effect as though such place were not owned, held, or possessed by the United States. [(e) Repealed. Sept. 1, 1954, ch. 1212, § 4(c), 68 Stat. 1135] (f) American vessels The legislature of any State in which a person maintains the operating office, from which the operations of an American vessel operating on navigable waters within or within and without the United States are ordinarily and regularly supervised, managed, directed and controlled, may require such person and the officers and members of the crew of such vessel to make con- tributions to its unemployment fund under its State unemployment compensation law ap- proved by the Secretary of Labor under section 3304 and otherwise to comply with its unemploy- ment compensation law with respect to the serv- ice performed by an officer or member of the crew on or in connection with such vessel to the same extent and with the same effect as though such service was performed entirely within such State. Such person and the officers and members of the crew of such vessel shall not be required to make contributions, with respect to such service, to the unemployment fund of any other State. The permission granted by this sub- section is subject to the condition that such service shall be treated, for purposes of wage credits given employees, like other service sub- ject to such State unemployment compensation law performed for such person in such State, and also subject to the same limitation, with respect to contributions required from such person and from the officers and members of the crew of such vessel, as is imposed by the second sen- tence (other than clause (B) thereof) of sub- section (b) with respect to contributions re- quired from instrumentalities of the United States and from individuals in their employ. (g) Vessels operated by general agents of United States The permission granted by subsection (f) shall apply in the same manner and under the same conditions (including the obligation to comply with all requirements of State unemployment compensation laws) to general agents of the Sec- retary of Transportation with respect to service performed by officers and members of the crew on or in connection with American vessels— (1) owned by or bareboat chartered to the United States, and (2) whose business is conducted by such gen- eral agents. As to any such vessel, the State permitted to re- quire contributions on account of such service shall be the State to which the general agent would make contributions if the vessel were op- erated for his own account. Such general agents are designated, for this purpose, instrumental- ities of the United States neither wholly nor partially owned by it and shall not be exempt from the tax imposed by section 3301. The per- mission granted by this subsection is subject to the same conditions and limitations as are im- posed in subsection (f), except that clause (B) of the second sentence of subsection (b) shall apply. Page 2809 TITLE 26—INTERNAL REVENUE CODE § 3306 (h) Requirement by State of contributions Any State may, as to service performed on ac- count of which contributions are made pursuant to subsection (g)— (1) require contributions from persons per- forming such service under its unemployment compensation law or temporary disability in- surance law administered in connection there- with, and (2) require general agents of the Secretary of Transportation to make contributions under such temporary disability insurance law and to make such deductions from wages or remu- neration as are required by such unemploy- ment compensation or temporary disability insurance law. (i) General agent as legal entity Each general agent of the Secretary of Trans- portation making contributions pursuant to subsection (g) or (h) shall, for purposes of such subsections, be considered a legal entity in his capacity as an instrumentality of the United States, separate and distinct from his identity as a person employing individuals on his own ac- count. (j) Denial of credits in certain cases Any person required, pursuant to the permis- sion granted by this section, to make contribu- tions to an unemployment fund under a State unemployment compensation law approved by the Secretary of Labor under section 3304 shall not be entitled to the credits permitted, with re- spect to the unemployment compensation law of a State, by subsections (a) and (b) of section 3302 against the tax imposed by section 3301 for any taxable year if, on October 31 of such taxable year, the Secretary of Labor certifies to the Sec- retary of the Treasury his finding, after reason- able notice and opportunity for hearing to the State agency, that the unemployment com- pensation law of such State is inconsistent with any one or more of the conditions on the basis of which such permission is granted or that, in the application of the State law with respect to the 12-month period ending on such October 31, there has been a substantial failure to comply with any one or more of such conditions. For purposes of section 3310, a finding of the Sec- retary of Labor under this subsection shall be treated as a finding under section 3304(c). (Aug. 16, 1954, ch. 736, 68A Stat. 445; Sept. 1, 1954, ch. 1212, § 4(c), 68 Stat. 1135; Pub. L. 86–778, title V, § 531(a), (b), Sept. 13, 1960, 74 Stat. 983; Pub. L. 91–373, title I, § 123, Aug. 10, 1970, 84 Stat. 702; Pub. L. 94–455, title XIX, §§ 1903(a)(15), 1906(b)(13)(C), Oct. 4, 1976, 90 Stat. 1809, 1834; Pub. L. 114–92, div. C, title XXXV, § 3503, Nov. 25, 2015, 129 Stat. 1219.) Editorial Notes AMENDMENTS 2015—Subsecs. (g), (h)(2), (i). Pub. L. 114–92 sub- stituted ‘‘Secretary of Transportation’’ for ‘‘Secretary of Commerce’’. 1976—Subsec. (g). Pub. L. 94–455, § 1903(a)(15)(A), struck out ‘‘on or after July 1, 1953,’’ after ‘‘respect to service performed’’. Subsec. (h). Pub. L. 94–455, 1903(a)(15)(B), struck out ‘‘on or after July 1, 1953, and’’ after ‘‘as to service per- formed’’. Subsec. (j). Pub. L. 94–455, §§ 1903(a)(15)(C), 1906(b)(13)(C), struck out ‘‘after December 31, 1971,’’ after ‘‘for any taxable year’’ and substituted ‘‘to the Secretary of the Treasury’’ for ‘‘to the Secretary’’. 1970—Subsec. (j). Pub. L. 91–373 added subsec. (j). 1960—Subsec. (b). Pub. L. 86–778, § 531(a), substituted ‘‘(other than an instrumentality to which section 3306(c)(6) applies)’’ for ‘‘except such as are (1) wholly owned by the United States, or (2) exempt from the tax imposed by section 3301 by virtue of any other provi- sion of law,’’ and added cl. (C). Subsec. (g). Pub. L. 86–778, § 531(b), substituted ‘‘nei- ther wholly nor partially’’ for ‘‘not wholly’’. 1954—Subsec. (e). Act Sept. 1, 1954, repealed subsec. (e) which related to the Bonneville Power Adminis- trator. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1960 AMENDMENT Pub. L. 86–778, title V, § 535, Sept. 13, 1960, 74 Stat. 985, provided that: ‘‘The amendments made by this part [part 3 (§§ 531–535) of title V of Pub. L. 86–778, enacting section 3308 and amending this section and section 3306 of this title] (other than the amendments made by sub- sections (e) and (f) of section 531 [amending sections 1361 and 1367 of Title 42, The Public Health and Wel- fare]) shall apply with respect to remuneration paid after 1961 for services performed after 1961. The amend- ments made by subsections (e) and (f) of section 531 shall apply with respect to any week of unemployment which begins after December 31, 1960.’’ [The second sen- tence of section 535 was repealed by Pub. L. 89–554, § 8(a), Sept. 6, 1966, 80 Stat. 661.] EFFECTIVE DATE OF 1954 AMENDMENT Act Sept. 1, 1954, ch. 1212, § 4(c), 68 Stat. 1135, provided that the amendment made by that section is effective with respect to services performed after Dec. 31, 1954. APPLICABILITY TO FEDERAL LAND BANKS, FEDERAL IN- TERMEDIATE CREDIT BANKS, AND BANKS FOR CO- OPERATIVES Pub. L. 86–778, title V, § 531(g), Sept. 13, 1960, 74 Stat. 984, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘Notwithstanding section 203(b) of the Farm Credit Act of 1959, sections 3305(b), 3306(c)(6), and 3308 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], and sections 1501(a) and 1507(a) of the Social Security Act [sections 1361(a) and 1367 of Title 42, The Public Health and Welfare] shall be appli- cable, according to their terms, to the Federal land banks, Federal intermediate credit banks, and banks for cooperatives.’’ § 3306. Definitions (a) Employer For purposes of this chapter— (1) In general The term ‘‘employer’’ means, with respect to any calendar year, any person who— (A) during any calendar quarter in the cal- endar year or the preceding calendar year paid wages of $1,500 or more, or (B) on each of some 20 days during the cal- endar year or during the preceding calendar year, each day being in a different calendar week, employed at least one individual in employment for some portion of the day. For purposes of this paragraph, there shall not be taken into account any wages paid to, or employment of, an employee performing do- mestic services referred to in paragraph (3).