103D CONGRESS

2D SESSION H. R. 4278

AN ACT

To make improvements in the old-age, survivors,

the Social Security Act.and disability insurance program under title II of
103D CONGRESS

2D SESSION H. R. 4278

AN ACT

To make improvements in the old-age, survivors, and disability insurance program under title II of the Social Security Act.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Social Security Act

5 Amendments of 1994’’.
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1 SEC. 2. SIMPLIFICATION OF EMPLOYMENT TAXES ON

2 DOMESTIC SERVICES.

3 (a) COORDINATION OF COLLECTION OF DOMESTIC

4 SERVICE EMPLOYMENT WITH COLLECTION OF INCOME

5 TAXES.—

6 (1) IN GENERAL.—Chapter 25 of the Internal

7 Revenue Code of 1986 (relating to general provi8 sions relating to employment taxes) is amended by

9 adding at the end thereof the following new section:

10 ‘‘SEC. 3510. COORDINATION OF COLLECTION OF DOMESTIC

11 SERVICE EMPLOYMENT TAXES WITH COLLEC12 TION OF INCOME TAXES.

13 ‘‘(a) GENERAL RULE.—Except as otherwise provided

14 in this section—

15 ‘‘(1) returns with respect to domestic service

16 employment taxes shall be made on a calendar year

17 basis,

18 ‘‘(2) any such return for any calendar year

19 shall be filed on or before the 15th day of the fourth

20 month following the close of the employer’s taxable

21 year which begins in such calendar year, and

22 ‘‘(3) no requirement to make deposits (or to

23 pay installments under section 6157) shall apply

24 with respect to such taxes.

25 ‘‘(b) DOMESTIC SERVICE EMPLOYMENT TAXES SUB26 JECT TO ESTIMATED TAX PROVISIONS.—
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1 ‘‘(1) IN GENERAL.—Solely for purposes of sec2 tion 6654, domestic service employment taxes im3 posed with respect to any calendar year shall be

4 treated as a tax imposed by chapter 2 for the tax5 able year of the employer which begins in such cal6 endar year.

7 ‘‘(2) ANNUALIZATION.—Under regulations pre8 scribed by the Secretary, appropriate adjustments

9 shall be made in the application of section

10 6654(d)(2) in respect of the amount treated as tax

11 under paragraph (1).

12 ‘‘(3) TRANSITIONAL RULE.—For purposes of

13 applying section 6654 to a taxable year beginning in

14 1994, the amount referred to in clause (ii) of section

15 6654(d)(1)(B) shall be increased by 90 percent of

16 the amount treated as tax under paragraph (1) for

17 such taxable year.

18 ‘‘(c) DOMESTIC SERVICE EMPLOYMENT TAXES.—

19 For purposes of this section, the term ‘domestic service

20 employment taxes’ means—

21 ‘‘(1) any taxes imposed by chapter 21 or 23 on

22 remuneration paid for domestic service in a private

23 home of the employer, and
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1 ‘‘(2) any amount withheld from such remunera2 tion pursuant to an agreement under section

3 3402(p).

4 For purposes of this subsection, the term ‘domestic service

5 in a private home of the employer’ does not include service

6 described in section 3121(g)(5).

7 ‘‘(d) EXCEPTION WHERE EMPLOYER LIABLE FOR

8 OTHER EMPLOYMENT TAXES.—To the extent provided in

9 regulations prescribed by the Secretary, this section shall

10 not apply to any employer for any calendar year if such

11 employer is liable for any tax under this subtitle with re12 spect to remuneration for services other than domestic

13 service in a private home of the employer.

14 ‘‘(e) GENERAL REGULATORY AUTHORITY.—The Sec15 retary shall prescribe such regulations as may be nec16 essary or appropriate to carry out the purposes of this

17 section. Such regulations may treat domestic service em18 ployment taxes as taxes imposed by chapter 1 for purposes

19 of coordinating the assessment and collection of such em20 ployment taxes with the assessment and collection of do21 mestic employers’ income taxes.

22 ‘‘(f) AUTHORITY TO ENTER INTO AGREEMENTS TO

23 COLLECT STATE UNEMPLOYMENT TAXES.—

24 ‘‘(1) IN GENERAL.—The Secretary is hereby

25 authorized to enter into an agreement with any
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1 State to collect, as the agent of such State, such

2 State’s unemployment taxes imposed on remunera3 tion paid for domestic service in a private home of

4 the employer. Any taxes to be collected by the Sec5 retary pursuant to such an agreement shall be treat6 ed as domestic service employment taxes for pur7 poses of this section.

8 ‘‘(2) TRANSFERS TO STATE ACCOUNT.—Any

9 amount collected under an agreement referred to in

10 paragraph (1) shall be transferred by the Secretary

11 to the account of the State in the Unemployment

12 Trust Fund.

13 ‘‘(3) SUBTITLE F MADE APPLICABLE.—For

14 purposes of subtitle F, any amount required to be

15 collected under an agreement under paragraph (1)

16 shall be treated as a tax imposed by chapter 23.

17 ‘‘(4) STATE.—For purposes of this subsection,

18 the term ‘State’ has the meaning given such term by

19 section 3306(j)(1).’’.

20 (2) CLERICAL AMENDMENT.—The table of sec21 tions for chapter 25 of such Code is amended by

22 adding at the end thereof the following:

‘‘Sec. 3510. Coordination of collection of domestic service employment taxes with collection of income taxes.’’.

23 (3) EFFECTIVE DATE.—The amendments made

24 by this subsection shall apply to remuneration paid
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1 in calendar years beginning after December 31,

2 1994.

3 (4) EXPANDED INFORMATION TO EMPLOY4 ERS.—The Secretary of the Treasury or his delegate

5 shall prepare and make available information on the

6 Federal tax obligations of employers with respect to

7 employees performing domestic service in a private

8 home of the employer. Such information shall also

9 include a statement that such employers may have

10 obligations with respect to such employees under

11 State laws relating to unemployment insurance and

12 workers compensation.

13 (b) THRESHOLD REQUIREMENT FOR SOCIAL SECU14 RITY TAXES.—

15 (1) AMENDMENTS OF INTERNAL REVENUE

16 CODE.—

17 (A) Subparagraph (B) of section

18 3121(a)(7) of the Internal Revenue Code of

19 1986 (defining wages) is amended to read as

20 follows:

21 ‘‘(B) cash remuneration paid by an em22 ployer in any calendar year to an employee for

23 domestic service in a private home of the em24 ployer (within the meaning of subsection (y)), if

25 the cash remuneration paid in such year by the
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1 employer to the employee for such service is less

2 than the applicable dollar threshold (as defined

3 in subsection (y)) for such year;’’.

4 (B) Section 3121 of such Code is amended

5 by adding at the end thereof the following new

6 subsection:

7 ‘‘(y) DOMESTIC SERVICE IN A PRIVATE HOME.—For

8 purposes of subsection (a)(7)(B)—

9 ‘‘(1) EXCLUSION FOR CERTAIN FARM SERV10 ICE.—The term ‘domestic service in a private home

11 of the employer’ does not include service described

12 in subsection (g)(5).

13 ‘‘(2) APPLICABLE DOLLAR THRESHOLD.—The

14 term ‘applicable dollar threshold’ means $1,250. In

15 the case of calendar years after 1995, the Secretary

16 of Health and Human Services shall adjust such

17 $1,250 amount at the same time and in the same

18 manner as under section 215(a)(1)(B)(ii) of the So19 cial Security Act with respect to the amounts re20 ferred to in section 215(a)(1)(B)(i) of such Act, ex21 cept that, for purposes of this paragraph, 1993 shall

22 be substituted for the calendar year referred to in

23 section 215(a)(1)(B)(ii)(II) of such Act. If the

24 amount determined under the preceding sentence is
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1 not a multiple of $50, such amount shall be rounded

2 to the nearest multiple of $50.’’.

3 (C) The second sentence of section 3102(a)

4 of such Code is amended—

5 (i) by striking ‘‘calendar quarter’’

6 each place it appears and inserting ‘‘cal7 endar year’’, and

8 (ii) by striking ‘‘$50’’ and inserting

9 ‘‘the applicable dollar threshold (as defined

10 in section 3121(y)(2)) for such year’’.

11 (2) AMENDMENT OF SOCIAL SECURITY ACT.—

12 Subparagraph (B) of section 209(a)(6) of the Social

13 Security Act (42 U.S.C. 409(a)(6)(B)) is amended

14 to read as follows:

15 ‘‘(B) Cash remuneration paid by an employer in

16 any calendar year to an employee for domestic serv17 ice in a private home of the employer, if the cash re18 muneration paid in such year by the employer to the

19 employee for such service is less than the applicable

20 dollar threshold (as defined in section 3121(y)(2) of

21 the Internal Revenue Code of 1986) for such year.

22 As used in this subparagraph, the term ‘domestic

23 service in a private home of the employer’ does not

24 include service described in section 210(f)(5).’’.
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1 (3) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to remuneration paid

3 in calendar years beginning after December 31,

4 1994.

5 (4) RELIEF FROM LIABILITY FOR CERTAIN

6 UNDERPAYMENT AMOUNTS.—

7 (A) IN GENERAL.—On and after the date

8 of the enactment of this Act, an underpayment

9 to which this paragraph applies (and any pen10 alty, addition to tax, and interest with respect

11 to such underpayment) shall not be assessed

12 (or, if assessed, shall not be collected).

13 (B) UNDERPAYMENTS TO WHICH PARA14 GRAPH APPLIES.—This paragraph shall apply

15 to an underpayment to the extent of the

16 amount thereof which would not be an

17 underpayment if—

18 (i) the amendments made by para19 graph (1) had applied to calendar years

20 1993 and 1994, and

21 (ii)(I) the applicable dollar threshold

22 for calendar year 1993 were $1,150, and

23 (II) the applicable dollar threshold for

24 calendar year 1994 were $1,200.
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1 SEC. 3. ALLOCATIONS TO FEDERAL DISABILITY INSURANCE

2 TRUST FUND.

3 (a) ALLOCATION WITH RESPECT TO WAGES.—Sec4 tion 201(b)(1) of the Social Security Act (42 U.S.C.

5 401(b)(1)) is amended by striking ‘‘(O) 1.20 per centum’’

6 and all that follows through ‘‘December 31, 1999, and so

7 reported,’’ and inserting ‘‘(O) 1.20 per centum of the

8 wages (as so defined) paid after December 31, 1989, and

9 before January 1, 1994, and so reported, (P) 1.88 per

10 centum of the wages (as so defined) paid after December

11 31, 1993, and before January 1, 2000, and so reported,

12 and (Q) 1.80 per centum of the wages (as so defined) paid

13 after December 31, 1999, and so reported,’’.

14 (b) ALLOCATION WITH RESPECT TO SELF-EMPLOY15 MENT INCOME.—Section 201(b)(2) of such Act (42 U.S.C.

16 401(b)(2)) is amended striking ‘‘(O) 1.20 per centum’’

17 and all that follows through ‘‘December 31, 1999,’’ and

18 inserting ‘‘(O) 1.20 per centum of the amount of self-em19 ployment income (as so defined) so reported for any tax20 able year beginning after December 31, 1989, and before

21 January 1, 1994, (P) 1.88 per centum of the amount of

22 self-employment income (as so defined) so reported for

23 any taxable year beginning after December 31, 1993, and

24 before January 1, 2000, and (Q) 1.80 per centum of the

25 amount of self-employment income (as so defined) so re-
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1 ported for any taxable year beginning after December 31,

2 1999,’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply with respect to wages paid after

5 December 31, 1993, and self-employment income for tax6 able years beginning after such date.

7 (d) STUDY ON RISING COSTS OF DISABILITY BENE8 FITS.—

9 (1) IN GENERAL.—As soon as practicable after

10 the date of the enactment of this Act, the Secretary

11 of Health and Human Services shall conduct a com12 prehensive study of the reasons for rising costs pay13 able from the Federal Disability Insurance Trust

14 Fund.

15 (2) MATTERS TO BE INCLUDED IN STUDY.—In

16 conducting the study under this subsection, the Sec17 retary shall—

18 (A) determine the relative importance of

19 the following factors in increasing the costs

20 payable from the Trust Fund:

21 (i) increased numbers of applications

22 for benefits;

23 (ii) higher rates of benefit allowances;

24 and
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1 (iii) decreased rates of benefit termi2 nations; and

3 (B) identify, to the extent possible, under4 lying social, economic, demographic, pro5 grammatic, and other trends responsible for

6 changes in disability benefit applications, allow7 ances, and terminations.

8 (3) REPORT.—Not later than December 31,

9 1995, the Secretary shall transmit a report to the

10 Committee on Ways and Means of the House of

11 Representatives and the Committee on Finance of

12 the Senate setting forth the results of the study con13 ducted under this subsection, together with any rec14 ommendations for legislative changes which the

15 Secretary determines appropriate.

16 SEC. 4. NONPAYMENT OF BENEFITS TO INCARCERATED IN17 DIVIDUALS AND INDIVIDUALS CONFINED IN

18 CRIMINAL CASES PURSUANT TO CONVICTION

19 OR BY COURT ORDER BASED ON FINDINGS

20 OF INSANITY.

21 (a) IN GENERAL.—Section 202(x) of the Social Secu22 rity Act (42 U.S.C. 402(x)) is amended—

23 (1) in the heading, by inserting ‘‘and Certain

24 Other Inmates of Publicly Funded Institutions’’

25 after ‘‘Prisoners’’;
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1 (2) in paragraph (1) by striking ‘‘during which

2 such individual’’ and inserting ‘‘during which such

3 individual—’’, and by striking ‘‘is confined’’ and all

4 that follows and inserting the following:

5 ‘‘(A) is confined in a jail, prison, or other penal

6 institution or correctional facility pursuant to his

7 conviction of an offense punishable by imprisonment

8 for more than 1 year (regardless of the actual sen9 tence imposed), or

10 ‘‘(B) is confined by court order in an institution

11 at public expense in connection with—

12 ‘‘(i) a verdict that the individual is guilty

13 but insane, with respect to an offense punish14 able by imprisonment for more than 1 year,

15 ‘‘(ii) a verdict that the individual is not

16 guilty of such an offense by reason of insanity,

17 ‘‘(iii) a finding that such individual is in18 competent to stand trial under an allegation of

19 such an offense, or

20 ‘‘(iv) a similar verdict or finding with re21 spect to such an offense based on similar fac22 tors (such as a mental disease, a mental defect,

23 or mental incompetence),

24 and, for purposes of this subparagraph, an individ25 ual so confined shall be treated as remaining so con-
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1 fined until he or she is unconditionally released from

2 the care and supervision of such institution and such

3 institution ceases to meet the individual’s basic liv4 ing needs.’’; and

5 (3) in paragraph (3), by striking ‘‘any individ6 ual’’ and all that follows and inserting ‘‘any individ7 ual who is confined as described in paragraph (1) if

8 the confinement is under the jurisdiction of such

9 agency and the Secretary requires such information

10 to carry out the provisions of this section.’’.

11 (b) CONFORMING AMENDMENTS.—

12 (1) Section 226 of such Act (42 U.S.C. 426) is

13 amended by adding at the end the following new

14 subsection:

15 ‘‘(i) The requirements of subsections (a)(2) and

16 (b)(2) shall not be treated as met with respect to any indi17 vidual for any month if a monthly benefit to which such

18 individual is entitled under section 202 or 223 for such

19 month is not payable under section 202(x).’’.

20 (2) Section 226A of such Act (42 U.S.C. 426–

21 1) is amended by adding at the end the following

22 new subsection:

23 ‘‘(d) The requirements of subsection (a)(1) shall not

24 be treated as met with respect to any individual for any

25 month if a monthly benefit to which such individual is en-
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1 titled under section 202 or 223 for such month is not pay2 able under section 202(x).’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply with respect to benefits for months

5 commencing after 90 days after the date of the enactment

6 of this Act and with respect to items and services provided

7 after such 90-day period.

Passed the House of Representatives May 12, 1994.

Attest:

Clerk.