II 

108TH CONGRESS 

2D SESSION H. R. 3463 

IN THE SENATE OF THE UNITED STATES 

JULY 15, 2004 

Received 

AN ACT 

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

improve the administration of unemployment taxes and 

benefits. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘SUTA Dumping Pre3 vention Act of 2004’’. 

4 SEC. 2. TRANSFER OF UNEMPLOYMENT EXPERIENCE UPON 

5 TRANSFER OR ACQUISITION OF A BUSINESS. 

6 (a) IN GENERAL.—Section 303 of the Social Security 

7 Act (42 U.S.C. 503) is amended by adding at the end the 

8 following: 

9 ‘‘(k)(1) For purposes of subsection (a), the unemploy10 ment compensation law of a State must provide— 

11 ‘‘(A) that if an employer transfers its business 

12 to another employer, and both employers are (at the 

13 time of transfer) under substantially common owner14 ship, management, or control, then the unemploy15 ment experience attributable to the transferred busi16 ness shall also be transferred to (and combined with 

17 the unemployment experience attributable to) the 

18 employer to whom such business is so transferred, 

19 ‘‘(B) that unemployment experience shall not, 

20 by virtue of the transfer of a business, be trans21 ferred to the person acquiring such business if— 

22 ‘‘(i) such person is not otherwise an em23 ployer at the time of such acquisition, and 

24 ‘‘(ii) the State agency finds that such per25 son acquired the business solely or primarily for 
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1 the purpose of obtaining a lower rate of con2 tributions, 

3 ‘‘(C) that unemployment experience shall (or 

4 shall not) be transferred in accordance with such 

5 regulations as the Secretary of Labor may prescribe 

6 to ensure that higher rates of contributions are not 

7 avoided through the transfer or acquisition of a busi8 ness, 

9 ‘‘(D) that meaningful civil and criminal pen10 alties are imposed with respect to— 

11 ‘‘(i) persons that knowingly violate or at12 tempt to violate those provisions of the State 

13 law which implement subparagraph (A) or (B) 

14 or regulations under subparagraph (C), and 

15 ‘‘(ii) persons that knowingly advise another 

16 person to violate those provisions of the State 

17 law which implement subparagraph (A) or (B) 

18 or regulations under subparagraph (C), and 

19 ‘‘(E) for the establishment of procedures to 

20 identify the transfer or acquisition of a business for 

21 purposes of this subsection. 

22 ‘‘(2) For purposes of this subsection— 

23 ‘‘(A) the term ‘unemployment experience’, with 

24 respect to any person, refers to such person’s experi25 ence with respect to unemployment or other factors 
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1 bearing a direct relation to such person’s unemploy2 ment risk; 

3 ‘‘(B) the term ‘employer’ means an employer as 

4 defined under the State law; 

5 ‘‘(C) the term ‘business’ means a trade or busi6 ness (or a part thereof); 

7 ‘‘(D) the term ‘contributions’ has the meaning 

8 given such term by section 3306(g) of the Internal 

9 Revenue Code of 1986; 

10 ‘‘(E) the term ‘knowingly’ means having actual 

11 knowledge of or acting with deliberate ignorance of 

12 or reckless disregard for the prohibition involved; 

13 and 

14 ‘‘(F) the term ‘person’ has the meaning given 

15 such term by section 7701(a)(1) of the Internal Rev16 enue Code of 1986.’’. 

17 (b) STUDY AND REPORTING REQUIREMENTS.— 

18 (1) STUDY.—The Secretary of Labor shall con19 duct a study of the implementation of the provisions 

20 of section 303(k) of the Social Security Act (as 

21 added by subsection (a)) to assess the status and ap22 propriateness of State actions to meet the require23 ments of such provisions. 

24 (2) REPORT.—Not later than July 15, 2007, 

25 the Secretary of Labor shall submit to the Congress 
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1 a report that contains the findings of the study re2 quired by paragraph (1) and recommendations for 

3 any Congressional action that the Secretary con4 siders necessary to improve the effectiveness of sec5 tion 303(k) of the Social Security Act. 

6 (c) EFFECTIVE DATE.—The amendment made by 

7 subsection (a) shall, with respect to a State, apply to cer8 tifications for payments (under section 302(a) of the So9 cial Security Act) in rate years beginning after the end 

10 of the 26-week period beginning on the first day of the 

11 first regularly scheduled session of the State legislature 

12 beginning on or after the date of the enactment of this 

13 Act. 

14 (d) DEFINITIONS.—For purposes of this section— 

15 (1) the term ‘‘State’’ includes the District of 

16 Columbia, the Commonwealth of Puerto Rico, and 

17 the Virgin Islands; 

18 (2) the term ‘‘rate year’’ means the rate year 

19 as defined in the applicable State law; and 

20 (3) the term ‘‘State law’’ means the unemploy21 ment compensation law of the State, approved by 

22 the Secretary of Labor under section 3304 of the In23 ternal Revenue Code of 1986. 
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1 SEC. 3. USE OF NEW HIRE INFORMATION TO ASSIST IN AD2 MINISTRATION OF UNEMPLOYMENT COM3 PENSATION PROGRAMS. 

4 Section 453(j) of the Social Security Act (42 U.S.C. 

5 653(j)) is amended by adding at the end the following: 

6 ‘‘(8) INFORMATION COMPARISONS AND DISCLO7 SURE TO ASSIST IN ADMINISTRATION OF UNEMPLOY8 MENT COMPENSATION PROGRAMS.— 

9 ‘‘(A) IN GENERAL.—If, for purposes of ad10 ministering an unemployment compensation 

11 program under Federal or State law, a State 

12 agency responsible for the administration of 

13 such program transmits to the Secretary the 

14 names and social security account numbers of 

15 individuals, the Secretary shall disclose to such 

16 State agency information on such individuals 

17 and their employers maintained in the National 

18 Directory of New Hires, subject to this para19 graph. 

20 ‘‘(B) CONDITION ON DISCLOSURE BY THE

21 SECRETARY.—The Secretary shall make a dis22 closure under subparagraph (A) only to the ex23 tent that the Secretary determines that the dis24 closure would not interfere with the effective 

25 operation of the program under this part. 
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1 ‘‘(C) USE AND DISCLOSURE OF INFORMA2 TION BY STATE AGENCIES.— 

3 ‘‘(i) IN GENERAL.—A State agency 

4 may not use or disclose information pro5 vided under this paragraph except for pur6 poses of administering a program referred 

7 to in subparagraph (A). 

8 ‘‘(ii) INFORMATION SECURITY.—The 

9 State agency shall have in effect data secu10 rity and control policies that the Secretary 

11 finds adequate to ensure the security of in12 formation obtained under this paragraph 

13 and to ensure that access to such informa14 tion is restricted to authorized persons for 

15 purposes of authorized uses and disclo16 sures. 

17 ‘‘(iii) PENALTY FOR MISUSE OF IN18 FORMATION.—An officer or employee of 

19 the State agency who fails to comply with 

20 this subparagraph shall be subject to the 

21 sanctions under subsection (l)(2) to the 

22 same extent as if such officer or employee 

23 was an officer or employee of the United 

24 States. 
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1 ‘‘(D) PROCEDURAL REQUIREMENTS.— 

2 State agencies requesting information under 

3 this paragraph shall adhere to uniform proce4 dures established by the Secretary governing in5 formation requests and data matching under 

6 this paragraph. 

7 ‘‘(E) REIMBURSEMENT OF COSTS.—The 

8 State agency shall reimburse the Secretary, in 

9 accordance with subsection (k)(3), for the costs 

10 incurred by the Secretary in furnishing the in11 formation requested under this paragraph.’’. 

Passed the House of Representatives July 14, 2004. 

Attest: JEFF TRANDAHL, 

Clerk.