H. R. 3463

One Hundred Eighth Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the twentieth day of January, two thousand and four

An Act

To amend titles III and IV of the Social Security Act to improve the administration

of unemployment taxes and benefits.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

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
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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
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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
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furnishing the information requested under this paragraph.’’.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.