Social Security Act Amendments of 1994

Summary: Social Security Act Amendments of 1994 - Amends title II (Old Age, Survivors and Disability Insurance) of the Social Security Act (SSA) and the Internal Revenue Code (IRC) to raise from $50 to $1,250 the minimum amount of cash remuneration payable to a domestic employee in any year which is subject to social security employment taxes.  Provides for annual adjustments of such threshold. 
Amends IRC to:  (1) provide for the coordination of the collection of domestic service employment taxes with the collection of income taxes; (2) subject domestic service employment taxes to estimated tax provisions; (3) exempt certain employers from the payment of such taxes; and (4) authorize the Secretary of the Treasury to enter into agreements to collect State unemployment taxes imposed on such remuneration. 
Directs the Secretary to prepare and make available to employers information on their tax obligations under Federal and State law with regard to domestic employees. 
Absolves employers from liability for certain underpaid taxes and associated penalty and interest payments owed before this Act becomes effective. 
Directs the Secretary of Health and Human Services to study and report to the Congress on the reasons for rising costs payable from such Fund. 
Amends SSA title II to:  (1) increase the portion of wages and self-employment income subject to social security taxation that is allocated to the Federal Disability Insurance Trust Fund (Fund); and (2) modify restrictions on social security benefit payments to incarcerated felons, with changes converting such restrictions into an outright prohibition applicable to all individuals sentenced to imprisonment for more than one year (currently only convicted felons), as well as to individuals confined pursuant to a court order based on verdicts of insanity or similar mental disorders.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Social Security Act Amendments of 
1994''.

SEC. 2. SIMPLIFICATION OF EMPLOYMENT TAXES ON DOMESTIC SERVICES.

    (a) Coordination of Collection of Domestic Service Employment With 
Collection of Income Taxes.--
            (1) In general.--Chapter 25 of the Internal Revenue Code of 
        1986 (relating to general provisions relating to employment 
        taxes) is amended by adding at the end thereof the following 
        new section:

``SEC. 3510. COORDINATION OF COLLECTION OF DOMESTIC SERVICE EMPLOYMENT 
              TAXES WITH COLLECTION OF INCOME TAXES.

    ``(a) General Rule.--Except as otherwise provided in this section--
            ``(1) returns with respect to domestic service employment 
        taxes shall be made on a calendar year basis,
            ``(2) any such return for any calendar year shall be filed 
        on or before the 15th day of the fourth month following the 
        close of the employer's taxable year which begins in such 
        calendar year, and
            ``(3) no requirement to make deposits (or to pay 
        installments under section 6157) shall apply with respect to 
        such taxes.
    ``(b) Domestic Service Employment Taxes Subject to Estimated Tax 
Provisions.--
            ``(1) In general.--Solely for purposes of section 6654, 
        domestic service employment taxes imposed with respect to any 
        calendar year shall be treated as a tax imposed by chapter 2 
        for the taxable year of the employer which begins in such 
        calendar year.
            ``(2) Annualization.--Under regulations prescribed by the 
        Secretary, appropriate adjustments shall be made in the 
        application of section 6654(d)(2) in respect of the amount 
        treated as tax under paragraph (1).
            ``(3) Transitional rule.--For purposes of applying section 
        6654 to a taxable year beginning in 1994, the amount referred 
        to in clause (ii) of section 6654(d)(1)(B) shall be increased 
        by 90 percent of the amount treated as tax under paragraph (1) 
        for such taxable year.
    ``(c) Domestic Service Employment Taxes.--For purposes of this 
section, the term `domestic service employment taxes' means--
            ``(1) any taxes imposed by chapter 21 or 23 on remuneration 
        paid for domestic service in a private home of the employer, 
        and
            ``(2) any amount withheld from such remuneration pursuant 
        to an agreement under section 3402(p).
For purposes of this subsection, the term `domestic service in a 
private home of the employer' does not include service described in 
section 3121(g)(5).
    ``(d) Exception Where Employer Liable for Other Employment Taxes.--
To the extent provided in regulations prescribed by the Secretary, this 
section shall not apply to any employer for any calendar year if such 
employer is liable for any tax under this subtitle with respect to 
remuneration for services other than domestic service in a private home 
of the employer.
    ``(e) General Regulatory Authority.--The Secretary shall prescribe 
such regulations as may be necessary or appropriate to carry out the 
purposes of this section. Such regulations may treat domestic service 
employment taxes as taxes imposed by chapter 1 for purposes of 
coordinating the assessment and collection of such employment taxes 
with the assessment and collection of domestic employers' income taxes.
    ``(f) Authority To Enter Into Agreements To Collect State 
Unemployment Taxes.--
            ``(1) In general.--The Secretary is hereby authorized to 
        enter into an agreement with any State to collect, as the agent 
        of such State, such State's unemployment taxes imposed on 
        remuneration paid for domestic service in a private home of the 
        employer. Any taxes to be collected by the Secretary pursuant 
        to such an agreement shall be treated as domestic service 
        employment taxes for purposes of this section.
            ``(2) Transfers to state account.--Any amount collected 
        under an agreement referred to in paragraph (1) shall be 
        transferred by the Secretary to the account of the State in the 
        Unemployment Trust Fund.
            ``(3) Subtitle f made applicable.--For purposes of subtitle 
        F, any amount required to be collected under an agreement under 
        paragraph (1) shall be treated as a tax imposed by chapter 23.
            ``(4) State.--For purposes of this subsection, the term 
        `State' has the meaning given such term by section 
        3306(j)(1).''
            (2) Clerical amendment.--The table of sections for chapter 
        25 of such Code is amended by adding at the end thereof the 
        following:

                              ``Sec. 3510. Coordination of collection 
                                        of domestic service employment 
                                        taxes with collection of income 
                                        taxes.''
            (3) Effective date.--The amendments made by this subsection 
        shall apply to remuneration paid in calendar years beginning 
        after December 31, 1994.
            (4) Expanded information to employers.--The Secretary of 
        the Treasury or his delegate shall prepare and make available 
        information on the Federal tax obligations of employers with 
        respect to employees performing domestic service in a private 
        home of the employer. Such information shall also include a 
        statement that such employers may have obligations with respect 
        to such employees under State laws relating to unemployment 
        insurance and workers compensation.
    (b) Threshold Requirement for Social Security Taxes.--
            (1) Amendments of internal revenue code.--
                    (A) Subparagraph (B) of section 3121(a)(7) of the 
                Internal Revenue Code of 1986 (defining wages) is 
                amended to read as follows:
                    ``(B) cash remuneration paid by an employer in any 
                calendar year to an employee for domestic service in a 
                private home of the employer (within the meaning of 
                subsection (y)), if the cash remuneration paid in such 
                year by the employer to the employee for such service 
                is less than the applicable dollar threshold (as 
                defined in subsection (y)) for such year;''.
                    (B) Section 3121 of such Code is amended by adding 
                at the end thereof the following new subsection:
    ``(y) Domestic Service in a Private Home.--For purposes of 
subsection (a)(7)(B)--
            ``(1) Exclusion for certain farm service.--The term 
        `domestic service in a private home of the employer' does not 
        include service described in subsection (g)(5).
            ``(2) Applicable dollar threshold.--The term `applicable 
        dollar threshold' means $1,250. In the case of calendar years 
        after 1995, the Secretary of Health and Human Services shall 
        adjust such $1,250 amount at the same time and in the same 
        manner as under section 215(a)(1)(B)(ii) of the Social Security 
        Act with respect to the amounts referred to in section 
        215(a)(1)(B)(i) of such Act, except that, for purposes of this 
        paragraph, 1993 shall be substituted for the calendar year 
        referred to in section 215(a)(1)(B)(ii)(II) of such Act. If the 
        amount determined under the preceding sentence is not a 
        multiple of $50, such amount shall be rounded to the nearest 
        multiple of $50.''
                    (C) The second sentence of section 3102(a) of such 
                Code is amended--
                            (i) by striking ``calendar quarter'' each 
                        place it appears and inserting ``calendar 
                        year'', and
                            (ii) by striking ``$50'' and inserting 
                        ``the applicable dollar threshold (as defined 
                        in section 3121(y)(2)) for such year''.
            (2) Amendment of social security act.--Subparagraph (B) of 
        section 209(a)(6) of the Social Security Act (42 U.S.C. 
        409(a)(6)(B)) is amended to read as follows:
            ``(B) Cash remuneration paid by an employer in any calendar 
        year to an employee for domestic service in a private home of 
        the employer, if the cash remuneration paid in such year by the 
        employer to the employee for such service is less than the 
        applicable dollar threshold (as defined in section 3121(y)(2) 
        of the Internal Revenue Code of 1986) for such year. As used in 
        this subparagraph, the term `domestic service in a private home 
        of the employer' does not include service described in section 
        210(f)(5).''
            (3) Effective date.--The amendments made by this subsection 
        shall apply to remuneration paid in calendar years beginning 
        after December 31, 1994.
            (4) Relief from liability for certain underpayment 
        amounts.--
                    (A) In general.--On and after the date of the 
                enactment of this Act, an underpayment to which this 
                paragraph applies (and any penalty, addition to tax, 
                and interest with respect to such underpayment) shall 
                not be assessed (or, if assessed, shall not be 
                collected).
                    (B) Underpayments to which paragraph applies.--This 
                paragraph shall apply to an underpayment to the extent 
                of the amount thereof which would not be an 
                underpayment if--
                            (i) the amendments made by paragraph (1) 
                        had applied to calendar years 1993 and 1994, 
                        and
                            (ii)(I) the applicable dollar threshold for 
                        calendar year 1993 were $1,150, and
                            (II) the applicable dollar threshold for 
                        calendar year 1994 were $1,200.

SEC. 3. ALLOCATIONS TO FEDERAL DISABILITY INSURANCE TRUST FUND.

    (a) Allocation With Respect to Wages.--Section 201(b)(1) of the 
Social Security Act (42 U.S.C. 401(b)(1)) is amended by striking ``(O) 
1.20 per centum'' and all that follows through ``December 31, 1999, and 
so reported,'' and inserting ``(O) 1.20 per centum of the wages (as so 
defined) paid after December 31, 1989, and before January 1, 1994, and 
so reported, (P) 1.88 per centum of the wages (as so defined) paid 
after December 31, 1993, and before January 1, 2000, and so reported, 
and (Q) 1.80 per centum of the wages (as so defined) paid after 
December 31, 1999, and so reported,''.
    (b) Allocation With Respect to Self-Employment Income.--Section 
201(b)(2) of such Act (42 U.S.C. 401(b)(2)) is amended striking ``(O) 
1.20 per centum'' and all that follows through ``December 31, 1999,'' 
and inserting ``(O) 1.20 per centum of the amount of self-employment 
income (as so defined) so reported for any taxable year beginning after 
December 31, 1989, and before January 1, 1994, (P) 1.88 per centum of 
the amount of self-employment income (as so defined) so reported for 
any taxable year beginning after December 31, 1993, and before January 
1, 2000, and (Q) 1.80 per centum of the amount of self-employment 
income (as so defined) so reported for any taxable year beginning after 
December 31, 1999,''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to wages paid after December 31, 1993, and self-
employment income for taxable years beginning after such date.
    (d) Study on Rising Costs of Disability Benefits.--
            (1) In general.--As soon as practicable after the date of 
        the enactment of this Act, the Secretary of Health and Human 
        Services shall conduct a comprehensive study of the reasons for 
        rising costs payable from the Federal Disability Insurance 
        Trust Fund.
            (2) Matters to be included in study.--In conducting the 
        study under this subsection, the Secretary shall--
                    (A) determine the relative importance of the 
                following factors in increasing the costs payable from 
                the Trust Fund:
                            (i) increased numbers of applications for 
                        benefits;
                            (ii) higher rates of benefit allowances; 
                        and
                            (iii) decreased rates of benefit 
                        terminations; and
                    (B) identify, to the extent possible, underlying 
                social, economic, demographic, programmatic, and other 
                trends responsible for changes in disability benefit 
                applications, allowances, and terminations.
            (3) Report.--Not later than December 31, 1995, the 
        Secretary shall transmit a report to the Committee on Ways and 
        Means of the House of Representatives and the Committee on 
        Finance of the Senate setting forth the results of the study 
        conducted under this subsection, together with any 
        recommendations for legislative changes which the Secretary 
        determines appropriate.

SEC. 4. NONPAYMENT OF BENEFITS TO INDIVIDUALS CONFINED IN CRIMINAL 
              CASES PURSUANT TO CONVICTION OR BY COURT ORDER BASED ON 
              FINDINGS OF INSANITY.

    (a) In General.--Section 202(x) of the Social Security Act (42 
U.S.C. 402(x)) is amended--
            (1) in the heading, by inserting ``and Certain Other 
        Inmates of Publicly Funded Institutions'' after ``Prisoners'';
            (2) in paragraph (1) by striking ``during which such 
        individual'' and inserting ``during which such individual--'', 
        and by striking ``is confined'' and all that follows and 
        inserting the following:
            ``(A) is confined in a jail, prison, or other penal 
        institution or correctional facility pursuant to his conviction 
        of an offense for which he was sentenced to imprisonment for 
        more than 1 year, or
            ``(B) is confined by court order in an institution at 
        public expense in connection with--
                    ``(i) a verdict that the individual is guilty but 
                insane, with respect to an offense punishable by 
                imprisonment for more than 1 year,
                    ``(ii) a verdict that the individual is not guilty 
                of such an offense by reason of insanity,
                    ``(iii) a finding that such individual is 
                incompetent to stand trial under an allegation of such 
                an offense, or
                    ``(iv) a similar verdict or finding with respect to 
                such an offense based on similar factors (such as a 
                mental disease, a mental defect, or mental 
                incompetence).''; and
            (3) in paragraph (3), by striking ``any individual'' and 
        all that follows and inserting ``any individual who is confined 
        as described in paragraph (1) if the confinement is under the 
        jurisdiction of such agency and the Secretary requires such 
        information to carry out the provisions of this section.''.
    (b) Conforming Amendments.--
            (1) Section 226 of such Act (42 U.S.C. 426) is amended by 
        adding at the end the following new subsection:
    ``(i) The requirements of subsection (a)(2) shall not be treated as 
met with respect to any individual for any month if a monthly benefit 
to which such individual is entitled under section 202 or 223 for such 
month is not payable under section 202(x).''.
            (2) Section 226A of such Act (42 U.S.C. 426-1) is amended 
        by adding at the end the following new subsection:
    ``(d) The requirements of subsection (a)(1) shall not be treated as 
met with respect to any individual for any month if a monthly benefit 
to which such individual is entitled under section 202 or 223 for such 
month is not payable under section 202(x).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to benefits for months commencing after 90 days 
after the date of the enactment of this Act and with respect to items 
and services provided after such 90-day period.