I 

108TH CONGRESS 

1ST SESSION H. R. 541

To amend the Internal Revenue Code of 1986 to provide for employee benefits 

for work site employees of certain corporations operating on a cooperative 

basis. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 5, 2003

Mr. ANDREWS introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

for employee benefits for work site employees of certain 

corporations operating on a cooperative basis.

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

3 SECTION 1. COOPERATIVE EMPLOYING UNIT. 

4 (a) IN GENERAL.—Section 414 of the Internal Rev5 enue Code of 1986 (relating to definitions and special 

6 rules) is amended by adding at the end the following new 

7 subsection: 

8 ‘‘(w) COOPERATIVE EMPLOYING UNIT.—
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1 ‘‘(1) PLANS MAINTAINED BY COOPERATIVE EM2 PLOYING UNIT.—If a cooperative employing unit es3 tablishes or maintains one or more plans to provide 

4 employee benefits to work site employees, then, for 

5 purposes of applying the provisions of this title ap6 plicable to such benefits—

7 ‘‘(A) each such plan shall be treated as a 

8 single employer plan established and main9 tained by the cooperative employing unit, and 

10 ‘‘(B) the cooperative employing unit shall 

11 be treated as the employer of the work site em12 ployees eligible to participate in each such plan. 

13 ‘‘(2) DEFINITIONS.—For purposes of this sub14 section—

15 ‘‘(A) COOPERATIVE EMPLOYING UNIT.—

16 The term ‘cooperative employing unit’ means 

17 any corporation to which part I of subchapter 

18 T applies pursuant to section 1381(a) if—

19 ‘‘(i) all the shareholders of the cor20 poration report business operations using 

21 the same standard industrial classification 

22 code (or successor method of economic 

23 classification adopted by the Office of 

24 Management and Budget), 
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1 ‘‘(ii) the corporation has at least 21 

2 shareholders, and 

3 ‘‘(iii) the corporation has entered into 

4 a written agreement with each shareholder 

5 which provides, with respect to every work 

6 site employee providing services to such 

7 shareholder, that the corporation shall—

8 ‘‘(I) assume responsibility for 

9 payment of wages to the work site 

10 employee, 

11 ‘‘(II) with respect to such wages, 

12 assume responsibility for the with13 holding and payment of any applicable 

14 taxes under subtitle C, and for com15 plying with the reporting requirements 

16 under this title relating to such taxes, 

17 ‘‘(III) assume responsibility for 

18 any employee benefits provided under 

19 the agreement, 

20 ‘‘(IV) assume shared responsi21 bility with the shareholder for termi22 nating the employment of the work 

23 site employee and for recruiting and 

24 hiring any new worker, and 
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1 ‘‘(V) maintain employee records 

2 relating to the work site employee. 

3 Clause (iii) shall be applied without regard to 

4 the receipt or adequacy of payment from the 

5 shareholder for services to such shareholder. 

6 ‘‘(B) WORK SITE EMPLOYEE.—The term 

7 ‘work site employee’ means every individual 

8 providing services to one or more shareholders 

9 of the cooperative employing unit pursuant to 

10 an agreement described in paragraph (2)(A)(iii) 

11 between the shareholder and the cooperative 

12 employing unit.’’. 

13 (b) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2002.

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