A bill to amend titles III and IV of the Social Security Act to improve the administration of unemployment taxes and benefits.

Summary: SUTA Dumping Prevention Act of 2004 - Amends the Social Security Act (SSA) with respect to administration of unemployment taxes and benefits.

Revises SSA title III (Grants to States for Unemployment Compensation Administration) to require State unemployment compensation laws, as a condition of State eligibility for such grants, to provide for transfer of unemployment experience upon transfer or acquisition of a business. Directs the Secretary of Labor to study and report to Congress on State implementation of such requirement.

Revises SSA title IV part D (Child Support and Establishment of Paternity) to direct the Secretary of Health and Human Services to disclose information on individuals and their employers in the National Directory of New Hires to a State agency that, for purposes of administering a Federal or State unemployment compensation law, transmits such individuals' names and Social Security account numbers to the Secretary. Requires such disclosure only to the extent that it would not interfere with effective operation of the part D program.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``SUTA Dumping Prevention Act of 
2004''.

SEC. 2. TRANSFER OF UNEMPLOYMENT EXPERIENCE UPON TRANSFER OR 
              ACQUISITION OF A BUSINESS.

    (a) In General.--Section 303 of the Social Security Act (42 U.S.C. 
503) is amended by adding at the end the following:
    ``(k)(1) For purposes of subsection (a), the unemployment 
compensation law of a State must provide--
            ``(A) that if an employer transfers its business to another 
        employer, and both employers are (at the time of transfer) 
        under substantially common ownership, management, or control, 
        then the unemployment experience attributable to the 
        transferred business shall also be transferred to (and combined 
        with the unemployment experience attributable to) the employer 
        to whom such business is so transferred,
            ``(B) that unemployment experience shall not, by virtue of 
        the transfer of a business, be transferred to the person 
        acquiring such business if--
                    ``(i) such person is not otherwise an employer at 
                the time of such acquisition, and
                    ``(ii) the State agency finds that such person 
                acquired the business solely or primarily for the 
                purpose of obtaining a lower rate of contributions,
            ``(C) that unemployment experience shall (or shall not) be 
        transferred in accordance with such regulations as the 
        Secretary of Labor may prescribe to ensure that higher rates of 
        contributions are not avoided through the transfer or 
        acquisition of a business,
            ``(D) that meaningful civil and criminal penalties are 
        imposed with respect to--
                    ``(i) persons that knowingly violate or attempt to 
                violate those provisions of the State law which 
                implement subparagraph (A) or (B) or regulations under 
                subparagraph (C), and
                    ``(ii) persons that knowingly advise another person 
                to violate those provisions of the State law which 
                implement subparagraph (A) or (B) or regulations under 
                subparagraph (C), and
            ``(E) for the establishment of procedures to identify the 
        transfer or acquisition of a business for purposes of this 
        subsection.
    ``(2) For purposes of this subsection--
            ``(A) the term `unemployment experience', with respect to 
        any person, refers to such person's experience with respect to 
        unemployment or other factors bearing a direct relation to such 
        person's unemployment risk;
            ``(B) the term `employer' means an employer as defined 
        under the State law;
            ``(C) the term `business' means a trade or business (or a 
        part thereof);
            ``(D) the term `contributions' has the meaning given such 
        term by section 3306(g) of the Internal Revenue Code of 1986;
            ``(E) the term `knowingly' means having actual knowledge of 
        or acting with deliberate ignorance of or reckless disregard 
        for the prohibition involved; and
            ``(F) the term `person' has the meaning given such term by 
        section 7701(a)(1) of the Internal Revenue Code of 1986.''.
    (b) Study and Reporting Requirements.--
            (1) Study.--The Secretary of Labor shall conduct a study of 
        the implementation of the provisions of section 303(k) of the 
        Social Security Act (as added by subsection (a)) to assess the 
        status and appropriateness of State actions to meet the 
        requirements of such provisions.
            (2) Report.--Not later than July 15, 2007, the Secretary of 
        Labor shall submit to the Congress a report that contains the 
        findings of the study required by paragraph (1) and 
        recommendations for any Congressional action that the Secretary 
        considers necessary to improve the effectiveness of section 
        303(k) of the Social Security Act.
    (c) Effective Date.--The amendment made by subsection (a) shall, 
with respect to a State, apply to certifications for payments (under 
section 302(a) of the Social Security Act) in rate years beginning 
after the end of the 26-week period beginning on the first day of the 
first regularly scheduled session of the State legislature beginning on 
or after the date of the enactment of this Act.
    (d) Definitions.--For purposes of this section--
            (1) the term ``State'' includes the District of Columbia, 
        the Commonwealth of Puerto Rico, and the Virgin Islands;
            (2) the term ``rate year'' means the rate year as defined 
        in the applicable State law; and
            (3) the term ``State law'' means the unemployment 
        compensation law of the State, approved by the Secretary of 
        Labor under section 3304 of the Internal Revenue Code of 1986.

SEC. 3. USE OF NEW HIRE INFORMATION TO ASSIST IN ADMINISTRATION OF 
              UNEMPLOYMENT COMPENSATION PROGRAMS.

    Section 453(j) of the Social Security Act (42 U.S.C. 653(j)) is 
amended by adding at the end the following:
            ``(8)  Information comparisons and disclosure to assist in 
        administration of unemployment compensation programs.--
                    ``(A) In general.--If, for purposes of 
                administering an unemployment compensation program 
                under Federal or State law, a State agency responsible 
                for the administration of such program transmits to the 
                Secretary the names and social security account numbers 
                of individuals, the Secretary shall disclose to such 
                State agency information on such individuals and their 
                employers maintained in the National Directory of New 
                Hires, subject to this paragraph.
                    ``(B) Condition on disclosure by the secretary.--
                The Secretary shall make a disclosure under 
                subparagraph (A) only to the extent that the Secretary 
                determines that the disclosure would not interfere with 
                the effective operation of the program under this part.
                    ``(C) Use and disclosure of information by state 
                agencies.--
                            ``(i) In general.--A State agency may not 
                        use or disclose information provided under this 
                        paragraph except for purposes of administering 
                        a program referred to in subparagraph (A).
                            ``(ii) Information security.--The State 
                        agency shall have in effect data security and 
                        control policies that the Secretary finds 
                        adequate to ensure the security of information 
                        obtained under this paragraph and to ensure 
                        that access to such information is restricted 
                        to authorized persons for purposes of 
                        authorized uses and disclosures.
                            ``(iii) Penalty for misuse of 
                        information.--An officer or employee of the 
                        State agency who fails to comply with this 
                        subparagraph shall be subject to the sanctions 
                        under subsection (l)(2) to the same extent as 
                        if such officer or employee was an officer or 
                        employee of the United States.
                    ``(D) Procedural requirements.--State agencies 
                requesting information under this paragraph shall 
                adhere to uniform procedures established by the 
                Secretary governing information requests and data 
                matching under this paragraph.
                    ``(E) Reimbursement of costs.--The State agency 
                shall reimburse the Secretary, in accordance with 
                subsection (k)(3), for the costs incurred by the 
                Secretary in furnishing the information requested under 
                this paragraph.''.