60104 Federal Register / Vol. 62, No. 215 / Thursday, November 6, 1997 / Notices

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Puerto Rico

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Virgin Islands

West Virginia

Wisconsin

Wyoming

This certification is for the maximum

normal credit allowable under Section

3302(a) of the Code.

Signed at Washington, DC, on October 31,

1997.

Alexis M. Herman,

Secretary of Labor.

[FR Doc. 97–29371 Filed 11–5–97; 8:45 am]

BILLING CODE 4510–30–M

DEPARTMENT OF LABOR

Employment and Training

Administration

Federal-State Unemployment

Compensation Program:

Unemployment Insurance Program

Letters Interpreting Federal

Unemployment Insurance Law

The Employment and Training

Administration interprets Federal law

requirements pertaining to

unemployment compensation (UC) as

part of its role in the administration of

the Federal-State UC program. These

interpretations are issued in

Unemployment Insurance Program

Letters (UIPLs) to the State Employment

Security Agencies. The UIPLs described

below are published in the Federal

Register in order to inform the public.

UIPL 41–97

UIPL 40–79, dated August 3, 1979, set

forth the Department of Labor’s position

on whether Head Start agencies are

‘‘educational institutions’’ for purposes

of the ‘‘between and within terms

denial’’ provisions of Section

3304(a)(6)(A) of the Federal

Unemployment Tax Act (FUTA). This

section of FUTA has been amended

since that time. As such, questions have

been raised as to whether the treatment

of Head Start services has changed as a

result of the amendments. UIPL 41–97

reiterates the Department’s position

regarding Head Start agencies and

provides specific discussion of the

application of the between and within

terms denial to Head Start program

personnel.

UIPL 44–97

The Balanced Budget Act of 1997

(BBA) and the Taxpayer Relief Act of

1997 (TPRA), both enacted on August 6,

1997, made several changes affecting the

UC program. UIPL 44–97 provides

information on the amendments made

by the BBA and the TPRA. This UIPL

also discusses whether States are

required to amend their UC laws

regarding disclosure of UC information,

Reed Act transfers, and levy on

payments of UC as a result of the

amendments to these Acts.

Dated: October 31, 1997.

Raymond J. Uhalde,

Acting Assistant Secretary of Labor.

U.S. Department of Labor, Employment and

Training Administration, Washington,

D.C. 20210

Classification: UI

Correspondence Symbol: TEUL

Date: 09/30/97

Rescissions: None

Expiration Date: Continuing

Directive: Unemployment Insurance Program

Letter No. 41–97

To: All State Employment Security Agencies

From: Grace A. Kilbane, Director,

Unemployment Insurance Service

Subject: Application of Between and Within

Terms Denial to Head Start Program

Personnel

1. Purpose. To clarify the application of the

between and within terms denial provisions

of Section 3304(a)(6)(A) of the Federal

Unemployment Tax Act (FUTA) to Head

Start program personnel.

2. References. Section 3304(a)(6)(A),

FUTA; P.L. 94–566; P.L. 95–19, Draft

Language and Commentary to Implement the

Unemployment Compensation Amendments

of 1976—P.L. 94–566 and Supplement 4,

1976 Draft Legislation, dated August 26,

1977; Unemployment Insurance Program

Letter (UIPL) No. 40–79, dated August 3,

1979; UIPL No. 41–83, dated September 13,

1983; UIPL No. 30–85, dated July 12, 1985;

UIPL No. 15–92, dated January 27, 1992; and

UIPL No. 43–93, dated September 13, 1993.

3. Background. UIPL No. 40–79 set forth

the Department’s position on whether Head

Start agencies are ‘‘educational institutions’’

for purposes of the ‘‘between and within

terms denial’’ provisions required and/or

allowed by Section 3304(a)(6)(A), FUTA.

Subsequent amendments to the ‘‘between

and within terms denial’’ provisions have

raised questions about whether the treatment

of Head Start services has changed. This

UIPL reiterates the Department’s position and

provides specific discussion of the

amendments made following the issuance of

UIPL 40–79.

4. Discussion. Section 3304(a)(6)(A),

FUTA, requires, as a condition for employers

in a State to receive credit against the Federal

unemployment tax, that the State law

provide that unemployment compensation

(UC) be payable based on services to which

Section 3309(a)(1), FUTA, applies, in the

same amount, on the same terms, and subject

to the same conditions as UC payable on the

basis of other service subject to State law.

The major mandates of this Section are: (1)

coverage of services performed for State and

local governments and their instrumentalities

and nonprofit organizations as defined under

Section 3309(a)(1), FUTA; (2) equal treatment

in the payment of UC to employees of such

entities; and (3) denial of UC based on certain

educational services performed for such

entities between and within academic terms.

These conditions are required for employers

in a State to receive credit against the Federal

unemployment tax. UIPL No. 43–93

describes the optional and required denial

provisions in clauses (i) through (vi) of

Section 3304(a)(6)(A), FUTA. The six clauses

are described below:

• Clause (i) requires, unless the specified

conditions are met, the denial between two

successive academic years or terms based on

instructional, research, and principal

administrative services performed for an

educational institution.

• Clause (ii) permits, under specified

conditions, the between years or terms denial

based on all other (i.e., ‘‘nonprofessional’’)

services performed for an educational

institution, and retroactive payment based on

those services, if no work is available in the

second term, and the individuals have

otherwise met the eligibility requirements.

• Clause (iii) requires the within terms

denial of benefits during an established and

customary vacation period or holiday recess

based on all services performed for an

educational institution.

• Clause (iv) requires the between and

within terms denial of benefits based on all

services performed in an educational

institution while in the employ of an

educational service agency (ESA).

• Clause (v) permits the State to

implement the denial provisions of (i)

through (iv) for services performed by

governmental entities or nonprofit

organizations if such services are provided to

or on behalf of an educational institution.

• Clause (vi) permits the State to make the

between and within terms denial provisions

of clauses (iii) and (iv) optional based on the

‘‘nonprofessional’’ services described in

clause (ii).

5. Interpretation and Application. The

between and within terms denial provisions

apply only to services performed (1) for an

educational institution, (2) in an educational
Federal Register / Vol. 62, No. 215 / Thursday, November 6, 1997 / Notices 60105

institution while employed by an ESA, or (3)

to or on behalf of an educational institution

by a governmental entity or nonprofit

organization.

Whether Head Start Agencies are

Educational Institutions under Clauses (i)

and (ii) of Section 3304(a)(6)(A), FUTA. Head

Start programs are comprehensive

developmental programs designed to meet

children’s needs in the health (medical,

dental, mental, nutritional), social, and

education areas. The goal is child adjustment

and development at the emotional and social

levels, rather than school-type training.

Whether Head Start agencies are

‘‘educational institutions’’ was discussed in

UIPL 40–79. That UIPL stated that Head Start

programs operated by Community Action

Groups do not meet the criteria of

‘‘educational institutions,’’ and the between

and within terms denial does not, therefore,

apply to services performed for such groups.

UIPL 40–79 stated, however, that when a

local board of education operates a Head

Start program as an integral part of the school

system in facilities of an educational

institution, with Head Start workers as

employees of the board and the schools in

every respect, subject to all employing

policies, such as hiring, firing, working

conditions, as other employees performing

services for the educational institution, then

such workers are considered to be employed

by an educational institution. As such, these

workers are subject to the denial provisions

in the same manner as are all other

educational institution employees. This

remains the Department’s position.

Application of Clauses (iv) and (v), Section

3304(a)(6)(A), FUTA to Head Start Services.

UIPL 40–79 did not address clauses (iv) and

(v), as these provisions were not added until

1983. UIPL 41–83 advised the States of the

addition of these clauses to Federal law, but

did not discuss Head Start agencies.

Clause (iv) applies to services performed

for an ESA. Clause (iv) defines an ESA as ‘‘a

governmental agency or governmental entity

which is established and operated

exclusively for the purpose of providing such

services to one or more educational

institutions.’’ Since Head Start agencies do

not exist exclusively for the purpose of

providing services to educational

institutions, they are not ESAs.

Clause (v) permits States to apply the

between and within terms denial to services

‘‘provided to or on behalf of’’ an educational

institution by a governmental entity or

nonprofit organization to which Section

3309(a)(1), FUTA, applies. UIPL 41–83 states

that the words ‘‘provided to’’ require only

that the services provided to the educational

institution give some benefit or support to

the institution. The words ‘‘on behalf of’’ are

more restrictive. They apply—

to those employees of a governmental entity

or nonprofit organization who perform

services as an agent of or on the part of an

educational institution. This situation could

arise, therefore, only where an employee of

a governmental entity or nonprofit

organization performed services as an agent

of or on the part of an educational institution

in such a representative capacity.

Whether services are ‘‘provided to or

performed on behalf’’ of an educational

institution depends on the facts present in

each individual case. Thus, if State law

contains a provision implementing optional

clause (v), a case-by-case determination must

be made to determine if Head Start services

are ‘‘provided to or on behalf of an

educational institution,’’ assuming that the

Head Start agency is a governmental entity or

nonprofit organization to which Section

3309(a)(1), FUTA, applies.

If a State law implements optional clause

(v), the application to Head Start programs

may be limited as to scope and/or time by a

State, but, as discussed in UIPL 43–93, the

limitation must be uniformly applied

throughout the State. A State may not treat

Head Start services ‘‘provided to or on behalf

of’’ one school district differently from Head

Start services ‘‘provided to or on behalf of’’

those performed for another school district.

Also, a State may not treat the services

performed for a governmental entity

differently from services performed for a

nonprofit organization.

6. Action Required. Administrators are to

provide this information to appropriate staff.

7. Inquiries. Inquiries should be directed to

the appropriate Regional Office.

U.S. Department of Labor, Employment and

Training Administration, Washington,

D.C. 20210

Classification: UI

Correspondence School: TEUL

Date: October 9, 1997

Rescissions: None

Expiration Date: Continuing

Directive: Unemployment Insurance Program

Letter No. 44–97

To: All State Employment Security Agencies

From: Grace A. Kilbane, Director,

Unemployment Insurance Service

Subject: The Balanced Budget Act of 1997

and the Taxpayer Relief Act of 1997

1. Purpose. To advise the States of

amendments made to Federal law by the

Balanced Budget Act of 1997 and the

Taxpayer Relief Act of 1997 affecting the

Federal-State Unemployment Compensation

(UC) program.

2. References. The Balanced Budget Act of

1997 (BBA), P.L. 105–33; the Taxpayer Relief

Act of 1997 (TPRA), P.L. 105–34; the

Personal Responsibility and Work

Opportunity Reconciliation Act of 1996

(PRWORA), P.L. 104–193; the Internal

Revenue Code of 1986 (IRC), including the

Federal Unemployment Tax Act (FUTA); the

Social Security Act (SSA); and

Unemployment Insurance Program Letters

(UIPLs) Nos. 28–87, 45–89, 12–91, 11–92 and

37–96.

3. Background. The BBA and the TPRA,

both enacted on August 6, 1997, made

several changes affecting the UC program.

This UIPL provides information on eleven

amendments made by the BBA and four

amendments made by the TPRA. The

amendment discussed in item 4.a., related to

disclosure of UC information, may require

States to amend their laws to meet Federal

UC law requirements. In addition, States will

need to amend their laws to implement the

special Reed Act transfers discussed in item

6.b. Finally, States will need to determine

whether they need to amend their laws to

permit the continuous levy discussed in item

12.

4. Sections 5201 and 5533, BBA: National

Directory of New Hires (‘‘National

Directory’’).

a. Section 5201, BBA, Disclosure to

National Directory. Section 303(h)(1), SSA,

as amended by the PRWORA, requires States,

as a condition of receiving UC administrative

grants, to disclose wage and claim

information to the Secretary of Health and

Human Services for purposes of the National

Directory. Section 303(h)(1)(C), as amended

by the PRWORA, also required States to

establish such safeguards as the Secretary of

Labor determines are necessary to insure that

such information is used ‘‘only for purposes

of section 453(i)(1) [SSA] in carrying out the

child support enforcement program under

title IV’’ of the SSA. (Emphasis added.) The

BBA deleted the underscored language and

substituted ‘‘subsections (i)(1), (i)(3) and (j) of

section 453.’’ This amendment makes clear

that States must authorize the disclosure of

UC information to the National Director for:

• Use by programs funded under the

Transitional Assistance to Needy Families

program, the child support enforcement

program, and any ‘‘other purposes’’ specified

in Section 453. (Section 453(i)(1), SSA.) The

‘‘other purposes’’ are specified in Section

453(i)(3) and (j), SSA, described below.

• Use in the administration of the earned

income tax credit by the Internal Revenue

Service (IRS). (Section 453(i)(3), SSA.)

• Verification of information in the

National Directory by the Social Security

Administration; comparisons with the

Federal Case Registry of Child Support

Orders and other child support enforcement

purposes; use by the Social Security

Administration; and research related to

Transitional Assistance to Needy Families or

child support enforcement. In the case of

research, personal identifiers may not be

used. (Section 453(j), SSA.)

As no effective date is provided, this

amendment is effective as of the date of

enactment of the BBA. However, as discussed

in UIPL 37–96, pages 6 and 7, the effective

date of the disclosure requirements in

Section 303(h), SSA, for UC conformity

purposes is either October 1, 1997, or, if the

State qualifies for a grace period, January 1,

1998.

States will need to review their UC laws

and regulations to determine if their laws

permit disclosure in view of the above

requirement concerning redisclosures of

information provided to the National

Directory. Each State must take all actions

necessary to ensure that it will make such

disclosures by the effective date discussed in

the previous paragraph.

b. Section 5533, BBA: Technical

Amendment. Section 453A, SSA, requires

each State to establish a Directory of New

Hires. Section 453A(g)(2)(B), SSA, as added

by PRWORA, specifically cited a provision of

Federal UC law:

Wage and Unemployment Compensation

Information.—The State Directory of New

Hires shall, on a quarterly basis, furnish to

the National Directory of New Hires extracts

of the reports required under section

303(a)(6) [SSA] to be made to the Secretary

of Labor concerning the wages and

unemployment compensation paid to
60106 Federal Register / Vol. 62, No. 215 / Thursday, November 6, 1997 / Notices

individuals, by such dates, in such format,

and containing such information as the

Secretary of Health and Human Services

shall specify in regulations. [Emphasis

added.]

Since the Secretary of Labor does not

require the submittal of data on individuals

under Section 303(a)(6), SSA, this provision

created a technical problem. The BBA

deleted the underscored language and

substituted ‘‘information.’’ This amendment

does not affect what information must be

provided to the Secretary of Health and

Human Services. Nor does it change the fact

that both the FUTA and the SSA continue to

require UC agencies to provide wage and

claim information to the State directory. See

UIPL 37–96.

5. Section 5401, BBA: Base Periods and the

Pennington Case. In 1994 and 1997, the U.S.

Court of Appeals for the Seventh Circuit

issued two opinions in litigation commonly

known as Pennington. 22 F.3d 1376 (7th Cir.

1994), 110 F.3d. 502 (7th Cir. 1997). In its

1994 decision, the Court decided that a

State’s base period was not an eligibility

requirement, but instead was a ‘‘method of

administration’’ under Section 303(a)(1),

SSA, and, therefore, subject to Federal

jurisdiction. In its 1997 decision, the Court

ruled that Illinois’ base period, consisting of

the first four of the last five completed

calendar quarters, was not consistent with

the ‘‘methods of administration’’

requirement. This was because the existence

of the lag period between the base period and

benefit year meant some claimants had to

wait for their recent wages to fall within the

based period to qualify for UC. As a result

of these decisions, States anticipated that

they might be required to provide for

alternative base periods to reduce the lag.

The BBA clarifies that the base period is

not subject to the ‘‘methods of

administration’’ requirement. Therefore, in

the Department’s view, this legislation frees

States to determine their base periods

without regard to the ‘‘methods of

administration’’ requirement. Section 5401,

BBA, provides as follows:

(a) In General. No provision of a State law

under which the base period for such State

is defined or otherwise determined shall, for

purposes of section 303(a)(1) of the Social

Security Act (42 U.S.C. 503(a)(1)), be

considered a provision for a method of

administration.

(b) Definitions. For purposes of this

section, the terms ‘‘State law’’, ‘‘base period’’,

and ‘‘State’’ shall have the meanings given

them under section 205 of the Federal-State

Extended Unemployment Compensation Act

of 1970 [EUCA] (26 U.S.C. 3304 note.)

(c) Effective Date. This section shall apply

for purposes of any period beginning before,

on, or after the date of the enactment of this

Act.

‘‘State law,’’ as defined in Section 205(10),

EUCA, ‘‘means the unemployment

compensation law of the State, approved by

the Secretary under section 3304’’ of the

FUTA. ‘‘Base period,’’ as defined in Section

205(6), EUCA, ‘‘means the base period as

determined under applicable State law for

the benefit year.’’ ‘‘State,’’ as defined in

Section 205(8), EUCA, includes the 50 States,

the District of Columbia, Puerto Rico, and the

U.S. Virgin Islands.

This amendment does not require States to

amend their laws.

6. Sections 5402 and 5403, BBA: Increase

in Federal Unemployment Account (FUA)

Ceiling and Special Distribution to States

from the Unemployment Trust Fund. Section

903, SSA, provides that when, among other

things, three accounts in the Unemployment

Trust Fund reach their statutory limits, the

excess amounts will be transferred to the

States. These are called ‘‘Reed Act’’

distributions. The three accounts are the

Employment Security Administration

Account (ESAA), which pays for the

administration of the UC and employment

service programs; the Extended

Unemployment Compensation Account,

which pays for the Federal share of extended

benefits; and the FUA, which provides for

advances to States for the payment of UC.

a. Section 5402, BBA: Increase in FUC

Ceiling. Prior to amendment, the balance in

the FUA as of the end of any Federal fiscal

year (September 30) could not exceed 0.25

percent of the total wages subject to

contributions under all State UC laws. The

BBA changes this maximum balance to 0.5

percent effective October 1, 2001.

b. Sections 5403, BBA: Special Distribution

to States from the Unemployment Trust

Fund. The BBA amended Section 903 of the

SSA to cap the amount of Reed Act transfers

made with respect to the Federal fiscal years

ending in 1999, 2000 and 2001 at

$100,000,000 per year. Each State’s share of

these transfers will be based on the ratio of

the amount of ‘‘funds to be allocated to such

State for such fiscal year pursuant to the base

allocation formula under title III’’, SSA, to

‘‘the total amount of funds to be allocated to

all States for such fiscal year pursuant to the

base allocation formula under title III.’’ Any

amounts in excess of the $100,000,000

which, but for the BBA amendments, would

have been transferred to the States ‘‘shall, as

of the beginning of the succeeding fiscal year,

accrue to the Federal unemployment

account, without regard’’ to its statutory

limit.

Reed Act moneys transferred with respect

to these fiscal years may be used ‘‘only to pay

expenses incurred by [the State] for the

administration of its’’ UC law. Unlike

previous Reed Act transfers, States are

prohibited from using the amounts

transferred with respect to these three years

for the payment of UC or the administration

of State public employment offices. However,

among other uses, States may, as in the past,

use these Reed Act moneys for purchasing

real property for UC purposes. These

purchases could be amortized against UC

grant funds consistent with the UC grant

agreement.

Finally, the restrictions applicable to Reed

Act transfers in Section 903(c)(2), SSA, are

not applicable to the transfers made with

respect to fiscal years 1999, 2000 and 2001.

This means the amounts transferred to the

States may be used without obtaining an

appropriation from the State’s legislative

body.

State UC laws usually contain provisions

addressing the use of Reed Act moneys

transferred under Section 903, SSA. These

laws usually mirror the requirements of

Section 903(c)2), SSA, including a

requirement that the moneys be used for the

payment of UC unless appropriated by the

legislative body. States must amend these

provisions to prohibit the use of transfers

made with respect to fiscal years 1999, 2000,

and 2001 for the payment of UC. States may

further amend these provisions to authorize

use for administrative purposes without a

specific appropriation from the State

legislature. Nothing prohibits a State

legislature from appropriating such money or

from attaching conditions to the use of such

money, provided the money is used for UC

administration.

Draft language for State Reed Act

provisions was provided in UIPL 12–91. We

recommend that, using that language as a

basis, States insert the following language in

State law:

(4) Notwithstanding paragraph (1), money

credited with respect to Federal fiscal years

1999, 2000 and 2001, shall be used solely for

the administration of the UC program and are

not subject to appropriation by the

legislature. [Emphasis added.]

The underscored language is necessary

only if the State chooses to avoid the

appropriation process. As an alternative, a

State could appropriate the moneys without

subjecting them to the various restrictions

found in Section 901(c)(3), SSA. (For

example, under Section 901(c)(2), SSA, Reed

Act moneys may be used only for expenses

incurred after the date of enactment of the

State appropriation.) In this case, the

following language is recommended:

(4) Notwithstanding paragraph (1), money

credited with respect to Federal fiscal years

1999, 2000 and 2001, shall be used solely for

the administration of the UC program, and

such money shall not otherwise be subject to

the requirements of paragraph (1) when

appropriated by the legislature.

c. Reasons for Change. The House Report

describes the reason for increasing the FUA

ceiling and providing for the special

transfers:

The provision has two main effects: (1)

raising the ceiling in the Federal

Unemployment Account whole [sic] limiting

Reed Act transfers allows for further buildup

of funds pending a future recession requiring

increased administrative resources; and (2)

allowing $100 million in Reed Act transfers

will assist States in the administration of

their UI programs. (H. Rep. No. 105–149,

104th Cong. 1st Sess. 106 (1997).)

7. Section 5404, BBA: Interest-Free

Advances from the Unemployment Trust

Fund. Under Section 1202(b)(2), SSA,

advances made from the FUA during a

calendar year are interest free if the following

conditions are met:

• The advance is repaid in full before the

close of September 30 of the calendar year in

which the advances were made, and

• Following this repayment, no other

advance was made to the State during the

calendar year.

The BBA adds a third condition to Section

1202(b)(2). States must now meet ‘‘funding

goals, established under regulations issued

by the Secretary of Labor, relating to the
Federal Register / Vol. 62, No. 215 / Thursday, November 6, 1997 / Notices 60107

accounts of the States in the Unemployment

Trust Fund.’’ The amendment applies to

calendar years beginning after the date of

enactment of the BBA. The Department is

commencing work on the required

regulations.

According to the House Committee report,

this amendment is intended to encourage

solvency of State unemployment funds:

Should a State account become insolvent

during an economic downturn, adverse

conditions can result for the State and its

employers. Borrowing Federal funds imposes

a cost on the State at a time when it may face

other financial difficulties. The State may

react by raising taxes on its employers,

thereby discouraging economic activity

during a period when its economy is already

in decline * * *. The provision would

encourage States to maintain sufficient

unemployment trust fund balances to cover

the needs of unemployed workers in the

event of a recession. (H. Rep. No. 105–149,

104th Cong. 1st Sess. 108 (1997).)

8. Sections 5405 and 5407, BBA: Election

Workers and Employees of Schools Operated

Primarily for Religious Purposes. Section

3304(a)(6)(A), FUTA, requires, as a condition

for employers in a State to receive credit

against the Federal unemployment tax, that

UC be payable based on services performed

for State and local governmental entities,

their instrumentalities, and certain nonprofit

organizations. The BBA amended FUTA to

provide for two new exceptions to this

required coverage.

Section 5405 of the BBA added new

subparagraph (F) to Section 3309(b)(3),

FUTA, to permit States to exclude services

performed:

as an election official or election worker if

the amount of remuneration received by the

individual during the calendar year for

services as an election official or election

worker is less than $1,000.

Section 5407 of the BBA added new

subparagraph (C) to Section 3309(b)(1) to

permit States to exclude services performed

for:

(C) an elementary or secondary school

which is operated primarily for religious

purposes, which is described in section

501(c)(3), and which is exempt from tax

under section 501(a).

States were not previously permitted to

exclude services performed for a religiouslyoriented school from coverage where the

school was not operated, supervised,

controlled, or principally supported by a

church or convention or association of

churches. See UIPL 28–87. Since the new

exclusion is limited to elementary and

secondary schools, services performed by

employees of other nonaffiliated religiouslyoriented entities are still required to be

covered. (For example, day-care centers,

post-secondary schools or cemetery

associations.) Both exclusions ‘‘apply with

respect to service performed after the date of

the enactment of’’ the BBA. With respect to

election workers, this means that, if the

individual earned less than $1,000 in

calendar year 1997, the services are not

required to be covered after August 6, 1997.

States are not required to exclude these

services. The Department recommends that

States choosing to do so follow the language

in Federal law verbatim. However, the

language following ‘‘religious purposes’’ in

subparagraph (C) of Section 3309(b)(1) may

be omitted if, as is commonly the case, State

law provisions relating to coverage of

nonprofit organizations are already limited to

those organizations described in Section

501(c)(3), IRC, which are exempt from tax

under Section 501(a), IRC.

9. Section 5406, BBA: Coverage of Services

Performed by Inmates. The BBA added an

exclusion to the definition of employment in

Section 3306(c), FUTA, for:

(21) service performed by a person

committed to a penal institution.

This exclusion applies only for purposes of

the FUTA tax. However, as a result of this

new exclusion, States may elect to amend

their laws to exclude these services without

the employers for whom the services are

performed losing credit against the FUTA

tax.

The effective date of this amendment

applies ‘‘with respect to service performed

after January 1, 1994.’’ Should State law be

amended retroactively, amounts previously

paid into the State’s unemployment fund

with respect to these services under the State

law in effect at that time may not be refunded

to employers. This prohibition is explained

in UIPL 11–92.

10. Section 5608, BBA: State Program

Integrity Activities for Unemployment

Compensation. Section 901(c)(1)(A), SSA,

authorizes appropriations from the ESAA for

assisting States in the administration of their

UC laws. (Henceforth, these amounts will be

called the ‘‘regular’’ grant.) The BBA

amended this section to create a special

authorization for State program integrity

activities. Specifically, a new paragraph was

added to Section 901(c):

(5)(A) There are authorized to be

appropriated out of the employment security

administration account to carry out program

integrity activities, in addition to any

amounts available under paragraph

(1)(A)(i)—

(i) $89,000,000 for fiscal year 1998;

(ii) $91,000,000 for fiscal year 1999;

(iii) $93,000,000 for fiscal year 2000;

(iv) $96,000,000 for fiscal year 2001; and

(v) $98,000,000 for fiscal year 2002.

(B) In any fiscal year in which a State

receives funds appropriated pursuant to this

paragraph, the State shall expend a

proportion of the funds appropriated

pursuant to paragraph (1)(A)(i) to carry out

program integrity activities that is not less

than the proportion of the funds appropriated

under such paragraph that was expended by

the State to carry out program integrity

activities in fiscal year 1997.

(C) For purposes of this paragraph, the

term ‘‘program integrity activities’’ means

initial claims review activities, eligibility

review activities, benefit payments control

activities, and employer liability auditing

activities.

This amendment merely authorizes

amounts for appropriation for integrity

purposes; Congress must still appropriate the

amounts. If and when ‘‘integrity’’ moneys are

received by the States, their use is limited to

the integrity activities described in 901

(c)(5)(C), SSA.

Since Section 901(c)(5)(B), SSA, provides

that the State must expend the same

proportion of ‘‘regular’’ granted funds on

integrity activities as was expended in fiscal

year 1997, States may not use these integrity

moneys to reduce integrity costs to the

‘‘regular’’ grant as determined by fiscal year

1997 expenditures.

11. Section 221, TPRA: Employer-Provided

Educational Assistance. Section 3306(b)(13),

FUTA, excludes from the definition of wages

‘‘any payment made, or benefit furnished, to

or for the benefit of an employee if at the

time of such payment or such furnishing it

is reasonable to believe that the employee

will be able to exclude such payment or

benefit from income under section 127

* * *’’ of the IRC. Section 127, IRC, excludes

from gross income of the employee certain

amounts paid, or expenses incurred, up to

$5,250 in a calendar year, by the employer

for educational assistance to the employee.

Section 127 did not apply to taxable years

beginning after May 31, 1997. In the case of

tax year 1997, only expenses paid with

respect to courses beginning before July 1,

1997, could be taken into account.

The TPRA extends this exclusion. It now

applies to expenses paid with respect to

courses beginning through May 31, 2000. The

amendment applies to taxable years

beginning after December 31, 1996. The IRS

is responsible for administering this

provision.

12. Section 921, TPRA: Securities Brokers.

For purposes of determining whether an

individual is an ‘‘employee,’’ Section 3306(i),

FUTA, references Section 3121(d), IRC. That

section provides that, among other things, an

‘‘employee’’ is ‘‘any individual who, under

the usual common law rules applicable in

determining the employer-employee

relationship, has the status of employee.’’

The TPRA provides a clarification

concerning the employment tax status of

registered representatives of a securities

broker-dealer. It provides that ‘‘no weight

shall be given to instructions from the service

recipient which are imposed only in

compliance with investor protection

standards imposed by the Federal

Government, any State government, or a

governing body pursuant to a delegation by

a Federal or State agency.’’ The IRS is

responsible for administering this provision.

The provision is effective for ‘‘services

performed after December 31, 1997.’’

13. Section 1024, TPRA: Continuous Levy

on Payments of UC. Federal UC law provides

that payments of UC may not be subjected to

levy. See UIPL 45–89. (A levy is the seizure

of a person’s property or rights to property

to pay a debt.) Although the TPRA did not

amend these UC provisions, it authorized the

IRS to impose a continuous levy on certain

payments, including UC, until the levy is

released. This continuous levy may be

imposed on any individual who is liable for

an internal revenue tax and who does not pay

such tax within 10 days of notice and

demand by the IRS. Specifically, the TPRA

added new subsection (h) to Section 6331,

IRC—

(1) In General.—The effect of a levy on

specified payments to or received by a

taxpayer shall be continuous from the date
60108 Federal Register / Vol. 62, No. 215 / Thursday, November 6, 1997 / Notices

1Any portion of the closed session consisting

solely of staff briefings does not fall within the

Sunshine Act’s definition of the term ‘‘meeting’’

and, therefore, the requirements of the Sunshine

Act do not apply to any such portion of the closed

session. 5 U.S.C. 552(b)(a)(2) and (b). See also 45

CFR § 1622.2 & 1622.3.

such levy is first made until such levy is

released. Notwithstanding section 6334, such

continuous levy shall attach to up to 15

percent of any specified payment due to the

taxpayer.

(2) Specified Payment.—For the purposes

of paragraph (1), the term ‘‘specified

payment’’ means—

(A) any Federal payment other than a

payment for which eligibility is based on the

income or assets (or both) of a payee,

(B) any payment described in paragraph (4)

[pertaining to unemployment benefits], (7)

[workers compensation], (9) [wages, salary

and other income], or (11) [certain public

assistance] of section 6334(a), and

(C) any annuity or pension payment under

the Railroad Retirement Act or benefit under

the Railroad Unemployment Insurance Act.

Under new Section 6331(h)(2)(C), any

payment described in paragraph (4) of

Section 6334(a), IRC, may be continuously

levied up to 15 percent. Paragraph (4) applies

to any ‘‘amount payable to an individual

with respect to his unemployment (including

any portion thereof payable with respect to

dependents) under an unemployment

compensation law of the United States, or

any State, or of the District of Columbia or

of the Commonwealth of Puerto Rico.’’ Under

this authority, the IRS may levy any payment

under State or Federal UC law, including

payments under the UC for Federal

employees (UCFE), UC for Exservicemembers (UCX) and the Disaster

Unemployment Assistance (DUA) programs

as well as trade readjustment allowances

(TRA) under the Trade Adjustment

Assistance and NAFTA-Transitional

Adjustment Assistance programs.

The IRS may continuously levy up to 15

percent of ‘‘any specified payment.’’ The

amendment applies to levies issued after the

August 6, 1997, date of the enactment of the

TPRA.

The continuous levy is administered by the

IRS. The IRS may implement the continuous

levy through computer crossmatches with

State UC agencies. The UC agencies will be

responsible for deducting amounts levied

from UC, UCFE, UCX, DUA, and TRA and for

forwarding such amounts to the IRS. As the

IRS does not pay for costs of levies, the

Department is examining the funding

implications for the UC system.

Since, in accordance with Federal UC law,

all State laws currently prohibit the levy of

UC, the Department recommends that States

amend their laws to specifically authorize

continuous levy in accordance with Section

6331, IRC. Alternatively, States may view

Section 6331, IRC, as superseding State law.

14. Section 1035, TPRA: Extension of

Temporary Tax. Section 3301, FUTA,

imposes a tax of 6.2 percent on wages paid

in employment by employers. This tax was

to have dropped to 6.0 percent beginning in

calendar year 1999.

Under the TPRA amendments, the 6.2

percent tax will remain in effect through

calendar year 2007. The tax is now scheduled

to drop to 6.0 percent beginning with

calendar year 2008.

15 Action. Appropriate staff should be

advised of these amendments.

16. Inquiries. Please direct inquiries to the

appropriate Regional Office.

[FR Doc. 97–29370 Filed 11–5–97; 8:45 am]

BILLING CODE 4510–30–M

LEGAL SERVICES CORPORATION

Sunshine Act Meeting of the Board of

Directors

CORRECTION: As published on Oct. 28,

1997 (62 FR 55833) and on Nov. 4, 1997

(62 FR 59749), the agenda for the

meeting scheduled for Nov. 15, 1997, is

incorrect. The agenda is corrected as

follows:

OPEN SESSION:

1. Approval of agenda.

2. Approval of minutes of the Board’s

meeting of Sept. 20, 1997.

3. Approval of minutes of the Board’s

executive session meeting of Sept.

20, 1997.

4. Chairman’s and Members’ Reports.

5. President’s Report.

6. Appointment of an ad hoc committee

for annual performance evaluations

of the President and Inspector

General.

7. Consider and act on the report of the

Board’s Operations and Regulations

Committee.

a. Consideration of public comment

and action on final revisions to 45

CFR Part 1630, Costs Standards and

Procedures.

b. Consideration of public comment

and action on final rule 45 CFR Part

1643, Restriction on Assisted

Suicide, Euthanasia and Mercy

killing.

c. Consider and act on proposed

changes to the structure of the

Corporation’s management.

8. Consider and act on the report of the

Board’s Finance Committee.

9. Consider and act on the report of the

Ad Hoc Committee on Performance

Reviews of the President and

Inspector General.

a. Consider and act on procedural

matters, including personal

performance plans for the President

and the Inspector General, written

submissions prior to interviews,

and interview protocols.

10. Consider and act on report on

development of a strategic planning

process.

11. Inspector General’s Report.

12. Consider and act on proposed

Report of the Board of Directors to

accompany the Inspector General’s

Semi-annual Report to the Congress

for the period of April 1, 1997–

September 30, 1997.

CLOSED SESSION:

13. Briefing 1 by the Inspector General

on the activities of the OIG.

14. Consider and act on an internal

personnel issue relating to the

Corporation’s employee pension

plan.

15. Consider and act on the General

Counsel’s report on potential and

pending litigation involving the

Corporation.

OPEN SESSION:

16. Consider and act on whether to

change the date of the next annual

meeting and, if so, to what date.

17. Public comment.

18. Consider and act on other business.

Dated: November 4, 1997.

Victor M. Fortuno,

General Counsel.

[FR Doc. 97–29488 Filed 11–4–97; 12:41 pm]

BILLING CODE 7050–01–P

NATIONAL SCIENCE FOUNDATION

Notice of Permits Issued Under the

Antarctic Conservation Act of 1978

AGENCY: National Science Foundation.

ACTION: Notice of permits issued under

the Antarctic Conservation of 1978,

Public Law 95–541.

SUMMARY: The National Science

Foundation (NSF) is required to publish

notice of permits issued under the

Antarctic Conservation Act of 1978.

This is the required notice.

FOR FURTHER INFORMATION CONTACT:

Nadene G. Kennedy, Permit Office,

Office of Polar Programs, Rm. 755,

National Science Foundation, 4201

Wilson Boulevard, Arlington, VA 22230.

SUPPLEMENTARY INFORMATION: On

October 2, 1997, the National Science

Foundation published a notice in the

Federal Register of permit applications

received. Permits were issued on

October 31, 1997 to the following

applicants:

Brenda Hall & George Denton—Permit No.

98–014

Frederick W. Taylor, Sr.—Permit No. 98–015

Nadene G. Kennedy,

Permit Officer.

[FR Doc. 97–29383 Filed 11–5–97; 8:45 am]

BILLING CODE 7555–01–M