I 
111TH CONGRESS 
1ST SESSION H. R. 1312 
To amend the Internal Revenue Code of 1986 to exclude from Federal 
tax certain payments made in connection with reductions in force. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 4, 2009 
Mr. PAUL 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 exclude 
from Federal tax certain payments made in connection 
with reductions in force. 
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 ‘‘Unemployed Tax Relief 
Act of 2009’’. 
SEC. 2. EXCLUSION FROM INCOME FOR PAYMENTS IN CON-
NECTION WITH REDUCTIONS IN FORCE. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 139B the following new section: 
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‘‘SEC. 139C. PAYMENTS IN CONNECTION WITH REDUCTIONS 
IN FORCE. 
‘‘(a) IN GENERAL.—In the case of an individual who 
is separated from employment as a result of a reduction 
in force of the employer, gross income shall not include— 
‘‘(1) the last regular payment of wages (as de-
fined in section 3121) or compensation (as defined 
in section 3231), as the case may be, for service per-
formed before such separation, and 
‘‘(2) any severance amount received in connec-
tion with such separation. 
‘‘(b) EMPLOYMENT TAXES.—Amounts excluded from 
gross income under subsection (a) shall not be taken into 
account as wages for purposes of subtitle C. 
‘‘(c) SEVERANCE AMOUNT.—For purposes of this 
section, severance amount includes— 
‘‘(1) any amount based on months of service 
which is not in the nature of retirement, 
‘‘(2) any amount in lieu of unused vacation 
time or sick leave, 
‘‘(3) any amount in lieu of a required notice pe-
riod, and 
‘‘(4) any stock option offered as part of a sever-
ance package.’’. 
(b) TRUST FUNDS HELD HARMLESS.—There is 
hereby appropriated (out of any money in the Treasury 
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not otherwise appropriated) for each fiscal year to each 
employment-related fund an amount equal to the reduc-
tion in the transfers to such fund for such fiscal year by 
reason of the amendment made by subsection (a). For 
purposes of the preceding sentence, the term ‘‘employ-
ment-related fund’’ means a fund the contributions to 
which are determined in relation to taxes imposed under 
subtitle C of the Internal Revenue Code of 1986. 
(c) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1 of such Code 
is amended by inserting after the item relating to section 
139B the following new item: 
‘‘Sec. 139C. Payments in connection with reductions in force.’’. 
(d) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts received after Decem-
ber 31, 2007. 
Æ 
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