II
Calendar No. 431
103D CONGRESS
2D SESSION
H. R. 4278
IN THE SENATE OF THE UNITED STATES
MAY 16, 1994
Received
MAY 19 (legislative day, MAY 16), 1994
Read twice and placed on the calendar
AN ACT
To make improvements in the old-age, survivors, and disabil-
ity insurance program under title II of the Social Secu-
rity Act.
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 ‘‘Social Security Act
Amendments of 1994’’.
SEC. 2. SIMPLIFICATION OF EMPLOYMENT TAXES ON
DOMESTIC SERVICES.
(a) COORDINATION OF COLLECTION OF DOMESTIC
SERVICE EMPLOYMENT WITH COLLECTION OF INCOME
TAXES.—
(1) IN GENERAL.—Chapter 25 of the Internal
Revenue Code of 1986 (relating to general provi-
sions relating to employment taxes) is amended by
adding at the end thereof the following new section:
‘‘SEC. 3510. COORDINATION OF COLLECTION OF DOMESTIC
SERVICE EMPLOYMENT TAXES WITH COLLEC-
TION OF INCOME TAXES.
‘‘(a) GENERAL RULE.—Except as otherwise provided
in this section—
‘‘(1) returns with respect to domestic service
employment taxes shall be made on a calendar year
basis,
‘‘(2) any such return for any calendar year
shall be filed on or before the 15th day of the fourth
month following the close of the employer’s taxable
year which begins in such calendar year, and
‘‘(3) no requirement to make deposits (or to
pay installments under section 6157) shall apply
with respect to such taxes.
‘‘(b) DOMESTIC SERVICE EMPLOYMENT TAXES SUB-
JECT TO ESTIMATED TAX PROVISIONS.—
‘‘(1) IN GENERAL.—Solely for purposes of sec-
tion 6654, domestic service employment taxes im-
posed with respect to any calendar year shall be
treated as a tax imposed by chapter 2 for the tax-
able year of the employer which begins in such cal-
endar year.
‘‘(2) ANNUALIZATION.—Under regulations pre-
scribed by the Secretary, appropriate adjustments
shall be made in the application of section
6654(d)(2) in respect of the amount treated as tax
under paragraph (1).
‘‘(3) TRANSITIONAL
RULE.—For purposes of
applying section 6654 to a taxable year beginning in
1994, the amount referred to in clause (ii) of section
6654(d)(1)(B) shall be increased by 90 percent of
the amount treated as tax under paragraph (1) for
such taxable year.
‘‘(c) DOMESTIC SERVICE EMPLOYMENT TAXES.—
For purposes of this section, the term ‘domestic service
employment taxes’ means—
‘‘(1) any taxes imposed by chapter 21 or 23 on
remuneration paid for domestic service in a private
home of the employer, and
‘‘(2) any amount withheld from such remunera-
tion pursuant to an agreement under section
3402(p).
For purposes of this subsection, the term ‘domestic service
in a private home of the employer’ does not include service
described in section 3121(g)(5).
‘‘(d) EXCEPTION WHERE EMPLOYER LIABLE FOR
OTHER EMPLOYMENT TAXES.—To the extent provided in
regulations prescribed by the Secretary, this section shall
not apply to any employer for any calendar year if such
employer is liable for any tax under this subtitle with re-
spect to remuneration for services other than domestic
service in a private home of the employer.
‘‘(e) GENERAL REGULATORY AUTHORITY.—The Sec-
retary shall prescribe such regulations as may be nec-
essary or appropriate to carry out the purposes of this
section. Such regulations may treat domestic service em-
ployment taxes as taxes imposed by chapter 1 for purposes
of coordinating the assessment and collection of such em-
ployment taxes with the assessment and collection of do-
mestic employers’ income taxes.
‘‘(f) AUTHORITY TO ENTER INTO AGREEMENTS TO
COLLECT STATE UNEMPLOYMENT TAXES.—
‘‘(1) IN
GENERAL.—The Secretary is hereby
authorized to enter into an agreement with any
State to collect, as the agent of such State, such
State’s unemployment taxes imposed on remunera-
tion paid for domestic service in a private home of
the employer. Any taxes to be collected by the Sec-
retary pursuant to such an agreement shall be treat-
ed as domestic service employment taxes for pur-
poses of this section.
‘‘(2) TRANSFERS
TO
STATE
ACCOUNT.—Any
amount collected under an agreement referred to in
paragraph (1) shall be transferred by the Secretary
to the account of the State in the Unemployment
Trust Fund.
‘‘(3) SUBTITLE
F
MADE
APPLICABLE.—For
purposes of subtitle F, any amount required to be
collected under an agreement under paragraph (1)
shall be treated as a tax imposed by chapter 23.
‘‘(4) STATE.—For purposes of this subsection,
the term ‘State’ has the meaning given such term by
section 3306(j)(1).’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 25 of such Code is amended by
adding at the end thereof the following:
‘‘Sec. 3510. Coordination of collection of domestic service employ-
ment taxes with collection of income taxes.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to remuneration paid
in calendar years beginning after December 31,
1994.
(4) EXPANDED
INFORMATION
TO
EMPLOY-
ERS.—The Secretary of the Treasury or his delegate
shall prepare and make available information on the
Federal tax obligations of employers with respect to
employees performing domestic service in a private
home of the employer. Such information shall also
include a statement that such employers may have
obligations with respect to such employees under
State laws relating to unemployment insurance and
workers compensation.
(b) THRESHOLD REQUIREMENT FOR SOCIAL SECU-
RITY TAXES.—
(1) AMENDMENTS
OF
INTERNAL
REVENUE
CODE.—
(A) 
Subparagraph 
(B) 
of 
section
3121(a)(7) of the Internal Revenue Code of
1986 (defining wages) is amended to read as
follows:
‘‘(B) cash remuneration paid by an em-
ployer in any calendar year to an employee for
domestic service in a private home of the em-
ployer (within the meaning of subsection (y)), if
the cash remuneration paid in such year by the
employer to the employee for such service is less
than the applicable dollar threshold (as defined
in subsection (y)) for such year;’’.
(B) Section 3121 of such Code is amended
by adding at the end thereof the following new
subsection:
‘‘(y) DOMESTIC SERVICE IN A PRIVATE HOME.—For
purposes of subsection (a)(7)(B)—
‘‘(1) EXCLUSION
FOR
CERTAIN
FARM
SERV-
ICE.—The term ‘domestic service in a private home
of the employer’ does not include service described
in subsection (g)(5).
‘‘(2) APPLICABLE DOLLAR THRESHOLD.—The
term ‘applicable dollar threshold’ means $1,250. In
the case of calendar years after 1995, the Secretary
of Health and Human Services shall adjust such
$1,250 amount at the same time and in the same
manner as under section 215(a)(1)(B)(ii) of the So-
cial Security Act with respect to the amounts re-
ferred to in section 215(a)(1)(B)(i) of such Act, ex-
cept that, for purposes of this paragraph, 1993 shall
be substituted for the calendar year referred to in
section 215(a)(1)(B)(ii)(II) of such Act. If the
amount determined under the preceding sentence is
not a multiple of $50, such amount shall be rounded
to the nearest multiple of $50.’’.
(C) The second sentence of section 3102(a)
of such Code is amended—
(i) by striking ‘‘calendar quarter’’
each place it appears and inserting ‘‘cal-
endar year’’, and
(ii) by striking ‘‘$50’’ and inserting
‘‘the applicable dollar threshold (as defined
in section 3121(y)(2)) for such year’’.
(2) AMENDMENT OF SOCIAL SECURITY ACT.—
Subparagraph (B) of section 209(a)(6) of the Social
Security Act (42 U.S.C. 409(a)(6)(B)) is amended
to read as follows:
‘‘(B) Cash remuneration paid by an employer in
any calendar year to an employee for domestic serv-
ice in a private home of the employer, if the cash re-
muneration paid in such year by the employer to the
employee for such service is less than the applicable
dollar threshold (as defined in section 3121(y)(2) of
the Internal Revenue Code of 1986) for such year.
As used in this subparagraph, the term ‘domestic
service in a private home of the employer’ does not
include service described in section 210(f)(5).’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to remuneration paid
in calendar years beginning after December 31,
1994.
(4) RELIEF
FROM
LIABILITY
FOR
CERTAIN
UNDERPAYMENT AMOUNTS.—
(A) IN GENERAL.—On and after the date
of the enactment of this Act, an underpayment
to which this paragraph applies (and any pen-
alty, addition to tax, and interest with respect
to such underpayment) shall not be assessed
(or, if assessed, shall not be collected).
(B) UNDERPAYMENTS
TO
WHICH
PARA-
GRAPH APPLIES.—This paragraph shall apply
to an underpayment to the extent of the
amount thereof which would not be an
underpayment if—
(i) the amendments made by para-
graph (1) had applied to calendar years
1993 and 1994, and
(ii)(I) the applicable dollar threshold
for calendar year 1993 were $1,150, and
(II) the applicable dollar threshold for
calendar year 1994 were $1,200.
SEC. 3. ALLOCATIONS TO FEDERAL DISABILITY INSURANCE
TRUST FUND.
(a) ALLOCATION WITH RESPECT TO WAGES.—Sec-
tion 201(b)(1) of the Social Security Act (42 U.S.C.
401(b)(1)) is amended by striking ‘‘(O) 1.20 per centum’’
and all that follows through ‘‘December 31, 1999, and so
reported,’’ and inserting ‘‘(O) 1.20 per centum of the
wages (as so defined) paid after December 31, 1989, and
before January 1, 1994, and so reported, (P) 1.88 per
centum of the wages (as so defined) paid after December
31, 1993, and before January 1, 2000, and so reported,
and (Q) 1.80 per centum of the wages (as so defined) paid
after December 31, 1999, and so reported,’’.
(b) ALLOCATION WITH RESPECT TO SELF-EMPLOY-
MENT INCOME.—Section 201(b)(2) of such Act (42 U.S.C.
401(b)(2)) is amended striking ‘‘(O) 1.20 per centum’’
and all that follows through ‘‘December 31, 1999,’’ and
inserting ‘‘(O) 1.20 per centum of the amount of self-em-
ployment income (as so defined) so reported for any tax-
able year beginning after December 31, 1989, and before
January 1, 1994, (P) 1.88 per centum of the amount of
self-employment income (as so defined) so reported for
any taxable year beginning after December 31, 1993, and
before January 1, 2000, and (Q) 1.80 per centum of the
amount of self-employment income (as so defined) so re-
ported for any taxable year beginning after December 31,
1999,’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to wages paid after
December 31, 1993, and self-employment income for tax-
able years beginning after such date.
(d) STUDY ON RISING COSTS OF DISABILITY BENE-
FITS.—
(1) IN GENERAL.—As soon as practicable after
the date of the enactment of this Act, the Secretary
of Health and Human Services shall conduct a com-
prehensive study of the reasons for rising costs pay-
able from the Federal Disability Insurance Trust
Fund.
(2) MATTERS TO BE INCLUDED IN STUDY.—In
conducting the study under this subsection, the Sec-
retary shall—
(A) determine the relative importance of
the following factors in increasing the costs
payable from the Trust Fund:
(i) increased numbers of applications
for benefits;
(ii) higher rates of benefit allowances;
and
(iii) decreased rates of benefit termi-
nations; and
(B) identify, to the extent possible, under-
lying 
social, 
economic, 
demographic, 
pro-
grammatic, and other trends responsible for
changes in disability benefit applications, allow-
ances, and terminations.
(3) REPORT.—Not later than December 31,
1995, the Secretary shall transmit a report to the
Committee on Ways and Means of the House of
Representatives and the Committee on Finance of
the Senate setting forth the results of the study con-
ducted under this subsection, together with any rec-
ommendations for legislative changes which the
Secretary determines appropriate.
SEC. 4. NONPAYMENT OF BENEFITS TO INCARCERATED IN-
DIVIDUALS AND INDIVIDUALS CONFINED IN
CRIMINAL CASES PURSUANT TO CONVICTION
OR BY COURT ORDER BASED ON FINDINGS
OF INSANITY.
(a) IN GENERAL.—Section 202(x) of the Social Secu-
rity Act (42 U.S.C. 402(x)) is amended—
(1) in the heading, by inserting ‘‘and Certain
Other Inmates of Publicly Funded Institutions’’
after ‘‘Prisoners’’;
(2) in paragraph (1) by striking ‘‘during which
such individual’’ and inserting ‘‘during which such
individual—’’, and by striking ‘‘is confined’’ and all
that follows and inserting the following:
‘‘(A) is confined in a jail, prison, or other penal
institution or correctional facility pursuant to his
conviction of an offense punishable by imprisonment
for more than 1 year (regardless of the actual sen-
tence imposed), or
‘‘(B) is confined by court order in an institution
at public expense in connection with—
‘‘(i) a verdict that the individual is guilty
but insane, with respect to an offense punish-
able by imprisonment for more than 1 year,
‘‘(ii) a verdict that the individual is not
guilty of such an offense by reason of insanity,
‘‘(iii) a finding that such individual is in-
competent to stand trial under an allegation of
such an offense, or
‘‘(iv) a similar verdict or finding with re-
spect to such an offense based on similar fac-
tors (such as a mental disease, a mental defect,
or mental incompetence),
and, for purposes of this subparagraph, an individ-
ual so confined shall be treated as remaining so con-
fined until he or she is unconditionally released from
the care and supervision of such institution and such
institution ceases to meet the individual’s basic liv-
ing needs.’’; and
(3) in paragraph (3), by striking ‘‘any individ-
ual’’ and all that follows and inserting ‘‘any individ-
ual who is confined as described in paragraph (1) if
the confinement is under the jurisdiction of such
agency and the Secretary requires such information
to carry out the provisions of this section.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 226 of such Act (42 U.S.C. 426) is
amended by adding at the end the following new
subsection:
‘‘(i) The requirements of subsections (a)(2) and
(b)(2) shall not be treated as met with respect to any indi-
vidual for any month if a monthly benefit to which such
individual is entitled under section 202 or 223 for such
month is not payable under section 202(x).’’.
(2) Section 226A of such Act (42 U.S.C. 426–
1) is amended by adding at the end the following
new subsection:
‘‘(d) The requirements of subsection (a)(1) shall not
be treated as met with respect to any individual for any
month if a monthly benefit to which such individual is en-
titled under section 202 or 223 for such month is not pay-
able under section 202(x).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to benefits for months
commencing after 90 days after the date of the enactment
of this Act and with respect to items and services provided
after such 90-day period.
Passed the House of Representatives May 12, 1994.
Attest:
DONNALD K. ANDERSON,
Clerk.