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U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20210

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TEURL

ISSUE DATE

March 11, 1987

RESCISSIONS

 

EXPIRATION DATE

March 31, 1988

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 12-87

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

DONALD J. KULICK
Administrator
for Regional Management

 

SUBJECT

:

Amendments Made by the Tax Reform Act of 1986 (P.L. 99-514), the Alien Farmworker Act (P.L. 99-595), and the Immigration Refporm and Control Act of 1986 (P.L. 99-603), Which Affect the Federal-State Unemployment Compensation Program

 

  1. Purpose. To advise state agencies of recent amendments to Federal law affecting the Federal-State Unemployment Compensation (UC) program.

  2. References. The Tax Reform Act of 1986, the Alien Farmworker Act, the Immigration Reform and Control Act of 1986.

  3. Background. In late 1986, the President signed into law three bills containing provisions affecting the UC program.  These are the: a) Tax Reform Act of 1986 (P.L. 99-514), signed into law on October 22, 1986; b) Alien Farmworker Act (P.L. 99-595), signed into law on October 31, 1986: and, c) Immigration Reform and Control Act of 1986 (P.L. 99-603), signed into law on November 6, 1986.

    1. The Tax Reform Act of 1986 provides that all unemployment benefits will become taxable income with respect to benefits received after December 31, 1986.  Currently, unemployment insurance (UI) is taxable only if the combination of taxable income and UI payments exceeds $18,000 for joint returns or $12,000 for single returns.

      The Act also provides a two-year extension of the exclusion from the definition of wages of employer-financed educational assistance and group legal service plans (Sections 3306(b)(12) and (13) of the Federal Unemployment Tax Act (FUTA)): makes technical changes to Sections 3302(c)(2), 3302(f)(8), and 3306(o) of the FUTA; amends the Internal Revenue Code of 1954 concerning exclusions from the definition of "gross income" of certain prizes and awards; and temporarily excludes from the FUTA coverage services performed for certain Indian tribal governments.

    2. The Alien Farmworker Act extends for five years, through December 31, 1992, the exemption from "employment" under Section 3306(c)(1)(B), FUTA, of agricultural labor performed by certain nonimmigrant farmworkers admitted to work temporarily under specific provisions of the Immigration and Nationality Act.

    3. The Immigration Reform and Control Act of 1986 contains provisions relating to a system to verify alien eligibility for unemployment benefits.

    These amendments made several technical and significant changes affecting the Federal-State UC program which may require changes in State law or procedures.  However, only the alien verification provisions of the Immigration Reform and Control Act of 1986 may require changes in State laws for compliance with Section 303(f) of the Social Security Act (SSA).  The amendments are explained in attachments to this UIPL.

  4. Action Required. SESAs are requested to notify appropriate staff of these amendments and take necessary action to implement required changes in State laws or procedures.

  5. Inquires. Inquiries should be directed to your Regional Office.

  6. Attachments. Text, explanation and interpretation of UC amendments.

Public Law 99-514, The Tax Reform Act of 1986

Public Law 99-595, the Alien Farmworker Act

Public Law 99-603, the Immigration Reform and Control Act of 1986