To amend the Internal Revenue Code of 1986 to change certain threshold and other tests in order to decrease the amount of farm labor wages that are subject to Social Security and Medicare taxes, and for other purposes.

Summary: Amends the Internal Revenue Code and the Social Security Act to increase the cash remuneration or employer expenditure thresholds for agricultural labor wage purposes.Exempts from the definition of "employment" for employer tax purposes agricultural labor performed by a full-time student under 18 years old.Amends the Code to provide for collection coordination of agricultural labor employment tax and income tax.

SECTION 1. CHANGES IN THRESHOLD AND OTHER TESTS FOR DETERMINING AMOUNT 
              OF WAGES PAID TO AGRICULTURAL WORKERS THAT ARE SUBJECT TO 
              SOCIAL SECURITY AND MEDICARE TAXES.

    (a) Increase in $150 Remuneration Threshold to $1,000 and Increase 
in Total Farm Payroll Test.--
            (1) Internal revenue code of 1986.--Subparagraph (B) of 
        section 3121(a)(8) of the Internal Revenue Code of 1986 
        (relating to definition of wages) is amended--
                    (A) in clause (i), by striking ``$150'' and 
                inserting ``$1,000''; and
                    (B) in clause (ii), by striking ``$2500'' and 
                inserting ``$50,000''.
            (2) Social security act.--Subparagraph (B) of section 
        209(a)(7) of the Social Security Act (42 U.S.C. 409(a)(7)(B)) 
        (relating to definition of wages) is amended--
                    (A) in clause (i), by striking ``$150'' and 
                inserting ``$1,000''; and
                    (B) in clause (ii), by striking ``$2500'' and 
                inserting ``$50,000''.
    (b) Adjustment for Inflation.--
            (1) Internal revenue code of 1986.--Subsection (i) of 
        section 3121 of the Internal Revenue Code of 1986 (relating to 
        computation of wages in certain cases) is amended by adding at 
        the end the following new paragraph:
            ``(6) Agricultural labor.--
                    ``(A) In general.--For purposes of this chapter, in 
                the case of agricultural labor referred to in 
                subsection (a)(8), in the case of a calendar year after 
                2003, the $1,000 amount contained in subparagraph 
                (B)(i), and the $50,000 amount contained in 
                subparagraph (B)(ii), shall each be increased by an 
                amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins 
                        by substituting `calendar year 2002' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any increase determined under 
                subparagraph (A) is not a multiple of $50, such 
                increase shall be rounded to the next lowest multiple 
                of $50.''.
            (2) Social security act.--Section 209 of the Social 
        Security Act (42 U.S.C. 409) is amended by adding at the end 
        the following new subsection:
    ``(l)(1) For purposes of this title, in the case of agricultural 
labor referred to in subsection (a)(7), in the case of a calendar year 
after 2003, the $1,000 amount contained in subparagraph (B)(i), and the 
$50,000 amount contained in subparagraph (B)(ii), shall each be 
increased in the same manner as the $1,000 amount and the $50,000 
amount, respectively, contained in section 3121(a)(8)(B) of the 
Internal Revenue Code of 1986 are increased pursuant to section 
3121(i)(6) of such Code.''.
    (c) Exemption for Service Performed by Certain Full-Time 
Students.--
            (1) Internal revenue code of 1986.--Section 3121(b) of the 
        Internal Revenue Code of 1986 (relating to definition of 
        employment) is amended by striking ``or'' at the end of 
        paragraph (20), by striking the period at the end of paragraph 
        (21) and inserting ``; or'', and by adding at the end the 
        following new paragraph:
            ``(22) agricultural labor performed by a full-time student 
        who has not attained 18 years of age.''.
            (2) Social security act.--Section 210(a) of the Social 
        Security Act (42 U.S.C. 410(a)) is amended--
                    (A) by striking ``or'' at the end of paragraph 
                (20),
                    (B) by striking the period at the end of paragraph 
                (21) and inserting ``; or'', and
                    (C) by inserting after paragraph (21) the following 
                new paragraph:
            ``(22) Agricultural labor performed by a full-time student 
        who has not attained 18 years of age.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to remuneration paid after December 31, 2003.

SEC. 2. COORDINATION OF COLLECTION OF AGRICULTURAL LABOR EMPLOYMENT 
              TAXES WITH COLLECTION OF INCOME TAXES.

    (a) In General.--Subsection (c) of section 3510 of the Internal 
Revenue Code of 1986 (relating to coordination of collection of 
domestic service employment taxes with collection of income taxes) is 
amended to read as follows:
    ``(c) Eligible Employment Taxes.--
            ``(1) In general.--For purposes of this section, the term 
        `eligible employment taxes' means--
                    ``(A) domestic service employment taxes, and
                    ``(B) agricultural labor employment taxes.
            ``(2) Domestic service employment taxes.--For purposes of 
        paragraph (1), the term `domestic service employment taxes' 
        means--
                    ``(A) any taxes imposed by chapter 21 or 23 on 
                remuneration paid for domestic service in a private 
                home of the employer, and
                    ``(B) any amount withheld from such remuneration 
                pursuant to an agreement under section 3402(p).
        For purposes of this paragraph, the term `domestic service in a 
        private home of the employer' includes domestic service 
        described in section 3121(g)(5).
            ``(3) Agricultural labor employment taxes.--For purposes of 
        paragraph (1), the term `agricultural labor employment taxes' 
        means--
                    ``(A) any taxes imposed by chapter 21 or 23 on 
                remuneration paid for agricultural labor, and
                    ``(B) any amount withheld from such remuneration 
                pursuant to an agreement under section 3402(p).
        For purposes of this paragraph, the term `agricultural labor' 
        has the meaning provided in section 3121(g).''.
    (b) Conforming Amendments.--
            (1) The heading of section 3510 of such Code is amended by 
        inserting ``AND AGRICULTURAL LABOR'' after ``DOMESTIC 
        SERVICE''.
            (2) Subsections (a)(1), (b)(1), (e), and (f)(1) of such 
        section are each amended by striking ``domestic service 
        employment taxes'' and inserting ``eligible employment taxes''.
            (3) The heading of subsection (b) of such section is 
        amended by striking ``Domestic Service'' and inserting 
        ``Eligible''.
            (4) Subsection (d) and the first sentence of subsection 
        (f)(1) of such section are each amended by inserting before the 
        period at the end the following: ``or for agricultural labor''.
            (5) Subsection (e) of such section is amended by inserting 
        before the period at the end the following: ``and agricultural 
        labor employers' income taxes''.
    (c) Effective Date.--The amendments made by this section shall 
apply to remuneration paid after December 31, 2003.