II

106TH CONGRESS

1ST SESSION S. 1726

To amend the Internal Revenue Code of 1986 to treat for unemployment

compensation purposes Indian tribal governments the same as State

or local units of government or as nonprofit organizations.

IN THE SENATE OF THE UNITED STATES

OCTOBER 14, 1999

Mr. MCCAIN (for himself, Mr. CAMPBELL, and Mr. INOUYE) introduced the

following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to treat for

unemployment compensation purposes Indian tribal governments the same as State or local units of government

or as nonprofit organizations.

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 ‘‘Indian Tribal Govern5 ment Unemployment Compensation Act Tax Relief

6 Amendments of 1999’’.
2

•S 1726 IS

1 SEC. 2. TREATMENT OF INDIAN TRIBAL GOVERNMENTS

2 UNDER FEDERAL UNEMPLOYMENT TAX ACT.

3 (a) IN GENERAL.—Section 3306(c)(7) of the Internal

4 Revenue Code of 1986 (defining employment) is

5 amended—

6 (1) by inserting ‘‘or in the employ of an Indian

7 tribe,’’ after ‘‘service performed in the employ of a

8 State, or any political subdivision thereof,’’; and

9 (2) by inserting ‘‘or Indian tribes’’ after ‘‘whol10 ly owned by one or more States or political subdivi11 sions’’.

12 (b) PAYMENTS IN LIEU OF CONTRIBUTIONS.—Sec13 tion 3309 of the Internal Revenue Code of 1986 (relating

14 to State law coverage of services performed for nonprofit

15 organizations or governmental entities) is amended—

16 (1) in subsection (a)(2), by inserting ‘‘, includ17 ing an Indian tribe,’’ after ‘‘the State law shall pro18 vide that a governmental entity’’;

19 (2) in subsection (b)(3)(B), by inserting ‘‘, or

20 of an Indian tribe’’ after ‘‘of a State or political sub21 division thereof’’;

22 (3) in subsection (b)(3)(E), by inserting ‘‘or the

23 tribe’s’’ after ‘‘the State’’; and

24 (4) in subsection (b)(5) by inserting ‘‘or of an

25 Indian tribe’’ after ‘‘an agency of a State or political

26 subdivision thereof’’.
3

•S 1726 IS

1 (c) STATE LAW COVERAGE.—Section 3309 of the In2 ternal Revenue Code of 1986 (relating to State law cov3 erage of services performed for nonprofit organizations or

4 governmental entities) is amended by adding at the end

5 the following:

6 ‘‘(d) ELECTION BY INDIAN TRIBE.—The State law

7 shall provide that an Indian tribe may elect to make con8 tributions for employment as if the employment is within

9 the meaning of section 3306 or to make payments in lieu

10 of contributions under this section, and shall provide that

11 an Indian tribe may make separate elections for itself and

12 each subdivision, subsidiary, or business enterprise char13 tered and wholly owned by such Indian tribe. State law

14 may require an electing tribe to post a reasonable payment

15 bond or take other reasonable measures to assure the

16 making of payments in lieu of contributions under this

17 section. An election under this subsection may not be

18 made except by an Indian tribe within the meaning of sec19 tion 4(e) of the Indian Self-Determination and Education

20 Assistance Act (25 U.S.C. 450b(e)).’’.

21 (d) DEFINITIONS.—Section 3306 of the Internal Rev22 enue Code of 1986 (relating to definitions) is amended by

23 adding at the end the following:

24 ‘‘(u) INDIAN TRIBE.—For purposes of this chapter,

25 the term ‘Indian tribe’ has the meaning given to such term
4

•S 1726 IS

1 by section 4(e) of the Indian Self-Determination and Edu2 cation Assistance Act (25 U.S.C. 450b(e)), and includes

3 any subdivision, subsidiary, or business enterprise char4 tered and wholly owned by such an Indian tribe.’’.

5 (e) TRANSITION RULE.—For purposes of the Federal

6 Unemployment Tax Act, service performed in the employ

7 of an Indian tribe (as defined in section 3306(u) of the

8 Internal Revenue Code of 1986 (as added by this Act))

9 shall not be treated as employment (within the meaning

10 of section 3306 of such Code) if—

11 (1) it is service which is performed before the

12 date of enactment of this Act and with respect to

13 which the tax imposed under the Federal Unemploy14 ment Tax Act has not been paid; and

15 (2) such Indian tribe reimburses a State unem16 ployment fund for unemployment benefits paid for

17 service attributable to such tribe for such period.

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