[108th Congress Public Law 295]
[From the U.S. Government Printing Office]

[DOCID: f:publ295.108]

[[Page 1089]]

                   SUTA DUMPING PREVENTION ACT OF 2004

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Public Law 108-295
108th Congress

                                 An Act

  To amend titles III and IV of the Social Security Act to improve the 
   administration of unemployment taxes and benefits. <<NOTE: Aug. 9, 
                         2004 -  [H.R. 3463]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: SUTA 
Dumping Prevention Act of 2004. Inter- governmental relations. 42 USC 
1305 note.>> 


    This Act may be cited as the ``SUTA Dumping Prevention Act of 

            OF A BUSINESS.

    (a) In General.--Section 303 of the Social Security Act (42 U.S.C. 
503) is amended by adding at the end the following:
    ``(k)(1) For purposes of subsection (a), the unemployment 
compensation law of a State must provide--
            ``(A) that if an employer transfers its business to another 
        employer, and both employers are (at the time of transfer) under 
        substantially common ownership, management, or control, then the 
        unemployment experience attributable to the transferred business 
        shall also be transferred to (and combined with the unemployment 
        experience attributable to) the employer to whom such business 
        is so transferred,
            ``(B) that unemployment experience shall not, by virtue of 
        the transfer of a business, be transferred to the person 
        acquiring such business if--
                    ``(i) such person is not otherwise an employer at 
                the time of such acquisition, and
                    ``(ii) the State agency finds that such person 
                acquired the business solely or primarily for the 
                purpose of obtaining a lower rate of contributions,
            ``(C) that unemployment experience shall (or shall not) be 
        transferred in accordance with such regulations as the Secretary 
        of Labor may prescribe to ensure that higher rates of 
        contributions are not avoided through the transfer or 
        acquisition of a business,
            ``(D) that meaningful civil and criminal penalties are 
        imposed with respect to--
                    ``(i) persons that knowingly violate or attempt to 
                violate those provisions of the State law which 
                implement subparagraph (A) or (B) or regulations under 
                subparagraph (C), and
                    ``(ii) persons that knowingly advise another person 
                to violate those provisions of the State law which 

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                subparagraph (A) or (B) or regulations under 
                subparagraph (C), and
            ``(E) for the establishment of procedures to identify the 
        transfer or acquisition of a business for purposes of this 

    ``(2) For purposes of this subsection--
            ``(A) the term `unemployment experience', with respect to 
        any person, refers to such person's experience with respect to 
        unemployment or other factors bearing a direct relation to such 
        person's unemployment risk;
            ``(B) the term `employer' means an employer as defined under 
        the State law;
            ``(C) the term `business' means a trade or business (or a 
        part thereof);
            ``(D) the term `contributions' has the meaning given such 
        term by section 3306(g) of the Internal Revenue Code of 1986;
            ``(E) the term `knowingly' means having actual knowledge of 
        or acting with deliberate ignorance of or reckless disregard for 
        the prohibition involved; and
            ``(F) the term `person' has the meaning given such term by 
        section 7701(a)(1) of the Internal Revenue Code of 1986.''.

    (b) Study and Reporting Requirements.--
            (1) Study.--The Secretary of Labor shall conduct a study of 
        the implementation of the provisions of section 303(k) of the 
        Social Security Act (as added by subsection (a)) to assess the 
        status and appropriateness of State actions to meet the 
        requirements of such provisions.
            (2) Report.--Not later than July 15, 2007, the Secretary of 
        Labor shall submit to the Congress a report that contains the 
        findings of the study required by paragraph (1) and 
        recommendations for any Congressional action that the Secretary 
        considers necessary to improve the effectiveness of section 
        303(k) of the Social Security Act.

    (c) <<NOTE: Applicability. 42 USC 503 note.>> Effective Date.--The 
amendment made by subsection (a) shall, with respect to a State, apply 
to certifications for payments (under section 302(a) of the Social 
Security Act) in rate years beginning after the end of the 26-week 
period beginning on the first day of the first regularly scheduled 
session of the State legislature beginning on or after the date of the 
enactment of this Act.

    (d) Definitions.--For purposes of this section--
            (1) the term ``State'' includes the District of Columbia, 
        the Commonwealth of Puerto Rico, and the Virgin Islands;
            (2) the term ``rate year'' means the rate year as defined in 
        the applicable State law; and
            (3) the term ``State law'' means the unemployment 
        compensation law of the State, approved by the Secretary of 
        Labor under section 3304 of the Internal Revenue Code of 1986.


    Section 453(j) of the Social Security Act (42 U.S.C. 653(j)) is 
amended by adding at the end the following:
            ``(8)  Information comparisons and disclosure to assist in 
        administration of unemployment compensation programs.--
                    ``(A) In general.--If, for purposes of administering 
                an unemployment compensation program under Federal

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                or State law, a State agency responsible for the 
                administration of such program transmits to the 
                Secretary the names and social security account numbers 
                of individuals, the Secretary shall disclose to such 
                State agency information on such individuals and their 
                employers maintained in the National Directory of New 
                Hires, subject to this paragraph.
                    ``(B) Condition on disclosure by the secretary.--The 
                Secretary shall make a disclosure under subparagraph (A) 
                only to the extent that the Secretary determines that 
                the disclosure would not interfere with the effective 
                operation of the program under this part.
                    ``(C) Use and disclosure of information by state 
                          ``(i) In general.--A State agency may not use 
                      or disclose information provided under this 
                      paragraph except for purposes of administering a 
                      program referred to in subparagraph (A).
                          ``(ii) Information security.--The State agency 
                      shall have in effect data security and control 
                      policies that the Secretary finds adequate to 
                      ensure the security of information obtained under 
                      this paragraph and to ensure that access to such 
                      information is restricted to authorized persons 
                      for purposes of authorized uses and disclosures.
                          ``(iii) Penalty for misuse of information.--An 
                      officer or employee of the State agency who fails 
                      to comply with this subparagraph shall be subject 
                      to the sanctions under subsection (l)(2) to the 
                      same extent as if such officer or employee was an 
                      officer or employee of the United States.
                    ``(D) Procedural requirements.--State agencies 
                requesting information under this paragraph shall adhere 
                to uniform procedures established by the Secretary 
                governing information requests and data matching under 
                this paragraph.
                    ``(E) Reimbursement of costs.--The State agency 
                shall reimburse the Secretary, in accordance with 
                subsection (k)(3), for the costs incurred by the 
                Secretary in

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                furnishing the information requested under this 

    Approved August 9, 2004.


                                                        Vol. 150 (2004):
            July 14, considered and passed House.
            July 22, considered and passed Senate.