[United States Statutes at Large, Volume 118, 108th Congress, 2nd Session]
[From the U.S. Government Printing Office, www.gpo.gov]

118 STAT. 1090

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


(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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118 STAT. 1091

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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118 STAT. 1092

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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118 STAT. 1093

furnishing the information requested under this

Approved August 9, 2004.


July 14, considered and passed House.
July 22, considered and passed Senate.