I 
109TH CONGRESS 
2D SESSION 
H. R. 6274 
To amend the Federal Unemployment Tax Act to provide for the establish-
ment of a demonstration project program to permit States to more 
properly and efficiently administer the State’s unemployment compensa-
tion law, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 29, 2006 
Mr. CHOCOLA (for himself, Mr. SAM JOHNSON of Texas, and Mr. BRADY of 
Texas) introduced the following bill; which was referred to the Committee 
on Ways and Means 
A BILL 
To amend the Federal Unemployment Tax Act to provide 
for the establishment of a demonstration project program 
to permit States to more properly and efficiently admin-
ister the State’s unemployment compensation law, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Unemployment Tax 
Equity Act of 2006’’. 
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SEC. 2. DEMONSTRATION PROGRAM FOR STATE ADMINIS-
TRATION OF UNEMPLOYMENT COMPENSA-
TION PROGRAM. 
(a) IN GENERAL.—Chapter 23 of the Internal Rev-
enue Code of 1986 (26 U.S.C. 3301–3311) is amended— 
(1) by redesignating section 3311 as section 
3312; and 
(2) by inserting after section 3310 the following 
new section: 
‘‘SEC. 3311. DEMONSTRATION PROGRAM FOR STATE ADMIN-
ISTRATION OF UNEMPLOYMENT COMPENSA-
TION PROGRAM. 
‘‘(a) IN GENERAL.—The Secretary of Labor shall es-
tablish a demonstration program under which the primary 
responsibility for the proper and efficient administration 
of a State’s unemployment compensation law is trans-
ferred (by agreement with the Secretary of Labor) to each 
participating State for the duration of the demonstration 
project under such program. Such agreement shall contain 
such terms and conditions as the Secretary of Labor deter-
mines necessary or appropriate to carry out this section. 
‘‘(b) LIMITATION ON NUMBER OF PARTICIPATING 
STATES.—The Secretary of Labor may not enter into 
agreements under this section for demonstration projects 
under the demonstration program with more than 5 
States. 
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‘‘(c) APPLICATION.— 
‘‘(1) IN GENERAL.—The Governor of any State 
which desires to enter into an agreement under this 
section may submit an application to the Secretary 
of Labor at such time, in such manner, and includ-
ing such information as the Secretary of Labor may 
require. Such application shall, at a minimum, in-
clude— 
‘‘(A) a description of the demonstration 
project, including the authorization under State 
law for conducting the demonstration project 
and the time period during which such dem-
onstration project would be conducted; 
‘‘(B) a description of the goals relating to 
the demonstration project and the expected pro-
grammatic outcomes if the application to par-
ticipate in the demonstration project is ap-
proved, including how the demonstration project 
will assist in meeting the purposes of the dem-
onstration program described in subsection (a); 
‘‘(C) assurances, accompanied by detailed 
analysis, that the demonstration project will 
provide the amount of funding necessary for the 
proper and efficient administration of the 
State’s unemployment compensation law; 
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‘‘(D) a description of the manner in which 
the State will conduct an impact evaluation, 
using a control or comparison group or other 
methodology, of the demonstration project de-
scribed in subparagraph (A) and determine 
whether the goals and outcomes described in 
subparagraph (B) are achieved; and 
‘‘(E) assurances that the State will provide 
any reports relating to the demonstration 
project as the Secretary may require. 
‘‘(2) NOTICE.— 
‘‘(A) APPLICATION PROCEDURE.—The Sec-
retary of Labor shall provide notice to each 
State setting forth the purposes of the dem-
onstration program, the application require-
ments, and a due date for the receipt of appli-
cations. 
‘‘(B) APPROVAL OR DENIAL OF APPLICA-
TION.—The Secretary of Labor shall provide 
public notice of the decision to approve or deny 
any application submitted under this section 
within 30 days after notifying the State of such 
approval or disapproval. Notice under this sub-
paragraph may be provided through the Inter-
net or other appropriate means. 
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‘‘(d) PERIOD FOR WHICH DEMONSTRATION PROJECT 
IS IN EFFECT.— 
‘‘(1) IN
GENERAL.—A demonstration project 
for which the Secretary of Labor enters into an 
agreement with a State under this section shall, ex-
cept as provided in paragraphs (2) and (3)— 
‘‘(A) be for a period of 5 years, 
‘‘(B) not begin before January 1, 2008, 
and 
‘‘(C) terminate before January 1, 2014. 
‘‘(2) TERMINATION
OF
AGREEMENT
BY
SEC-
RETARY OF LABOR.—The Secretary of Labor may 
terminate an agreement entered into under this sec-
tion if the Secretary determines that the State has 
not complied with the terms and conditions specified 
in such agreement. 
‘‘(3) 
TERMINATION
OF
AGREEMENT
BY 
STATE.—Any State which is a party to an agree-
ment under this section may, upon providing 30 
days written notice to the Secretary of Labor, termi-
nate such agreement. 
‘‘(e) ADJUSTMENT OF CREDIT.—In the case of cred-
its allowed to a taxpayer under section 3302 with respect 
to the unemployment compensation law of a State for 
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which a demonstration project is in effect under this sec-
tion, section 3302 shall be applied— 
‘‘(1) in subsection (b) thereof by substituting 
‘5.8%’ for ‘5.4%’, and 
‘‘(2) in subsection (c)(1) thereof by substituting 
‘96.67 percent’ for ‘90 percent’.’’. 
(b) INELIGIBILITY
FOR GRANTS
FOR UNEMPLOY-
MENT COMPENSATION ADMINISTRATION.—Section 302 of 
the Social Security Act (42 U.S.C. 502) is amended by 
adding at the end the following new subsection: 
‘‘(d) The Secretary of Labor shall make no certifi-
cation under subsection (a) for payment to any State with 
respect to any fiscal year (or portion of a fiscal year) dur-
ing which such State is participating in a demonstration 
project established under section 3311 of the Internal Rev-
enue Code of 1986.’’. 
(c) CONFORMING AMENDMENT.—The table of sec-
tions for chapter 23 of such Code is amended by striking 
the item relating to section 3311 and inserting after the 
item relating to section 3310 the following: 
‘‘Sec. 3311. Demonstration program for State administration of unemployment 
compensation program. 
‘‘Sec. 3312. Short title.’’. 
Æ 
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