Internal Revenue Code:Sec. 3305. Applicability of State law

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle C - Employment Taxes
       CHAPTER 23 - FEDERAL UNEMPLOYMENT TAX ACT
     

Statute

    Sec. 3305. Applicability of State law
 
    (a) Interstate and foreign commerce
      No person required under a State law to make payments to an
    unemployment fund shall be relieved from compliance therewith on
    the ground that he is engaged in interstate or foreign commerce, or
    that the State law does not distinguish between employees engaged
    in interstate or foreign commerce and those engaged in intrastate
    commerce.
    (b) Federal instrumentalities in general
      The legislature of any State may require any instrumentality of
    the United States (other than an instrumentality to which section
    3306(c)(6) applies), and the individuals in its employ, to make
    contributions to an unemployment fund under a State unemployment
    compensation law approved by the Secretary of Labor under section
    3304 and (except as provided in section 5240 of the Revised
    Statutes, as amended (12 U.S.C., sec. 484), and as modified by
    subsection (c)), to comply otherwise with such law.  The permission
    granted in this subsection shall apply (A) only to the extent that
    no discrimination is made against such instrumentality, so that if
    the rate of contribution is uniform upon all other persons subject
    to such law on account of having individuals in their employ, and
    upon all employees of such persons, respectively, the contributions
    required of such instrumentality or the individuals in its employ
    shall not be at a greater rate than is required of such other
    persons and such employees, and if the rates are determined
    separately for different persons or classes of persons having
    individuals in their employ or for different classes of employees,
    the determination shall be based solely upon unemployment
    experience and other factors bearing a direct relation to
    unemployment risk; (B) only if such State law makes provision for
    the refund of any contributions required under such law from an
    instrumentality of the United States or its employees for any year
    in the event such State is not certified by the Secretary of Labor
    under section 3304 with respect to such year; and (C) only if such
    State law makes provision for the payment of unemployment
    compensation to any employee of any such instrumentality of the
    United States in the same amount, on the same terms, and subject to
    the same conditions as unemployment compensation is payable to
    employees of other employers under the State unemployment
    compensation law.
    (c) National banks
      Nothing contained in section 5240 of the Revised Statutes, as
    amended (12 U.S.C. 484), shall prevent any State from requiring any
    national banking association to render returns and reports relative
    to the association's employees, their remuneration and services, to
    the same extent that other persons are required to render like
    returns and reports under a State law requiring contributions to an
    unemployment fund.  The Comptroller of the Currency shall, upon
    receipt of a copy of any such return or report of a national
    banking association from, and upon request of, any duly authorized
    official, body, or commission of a State, cause an examination of
    the correctness of such return or report to be made at the time of
    the next succeeding examination of such association, and shall
    thereupon transmit to such official, body, or commission a complete
    statement of his findings respecting the accuracy of such returns
    or reports.
    (d) Federal property
      No person shall be relieved from compliance with a State
    unemployment compensation law on the ground that services were
    performed on land or premises owned, held, or possessed by the
    United States, and any State shall have full jurisdiction and power
    to enforce the provisions of such law to the same extent and with
    the same effect as though such place were not owned, held, or
    possessed by the United States.
    ((e) Repealed. Sept. 1, 1954, ch. 1212, Sec. 4(c), 68 Stat. 1135)
    (f) American vessels
      The legislature of any State in which a person maintains the
    operating office, from which the operations of an American vessel
    operating on navigable waters within or within and without the
    United States are ordinarily and regularly supervised, managed,
    directed and controlled, may require such person and the officers
    and members of the crew of such vessel to make contributions to its
    unemployment fund under its State unemployment compensation law
    approved by the Secretary of Labor under section 3304 and otherwise
    to comply with its unemployment compensation law with respect to
    the service performed by an officer or member of the crew on or in
    connection with such vessel to the same extent and with the same
    effect as though such service was performed entirely within such
    State. Such person and the officers and members of the crew of such
    vessel shall not be required to make contributions, with respect to
    such service, to the unemployment fund of any other State. The
    permission granted by this subsection is subject to the condition
    that such service shall be treated, for purposes of wage credits
    given employees, like other service subject to such State
    unemployment compensation law performed for such person in such
    State, and also subject to the same limitation, with respect to
    contributions required from such person and from the officers and
    members of the crew of such vessel, as is imposed by the second
    sentence (other than clause (B) thereof) of subsection (b) with
    respect to contributions required from instrumentalities of the
    United States and from individuals in their employ.
    (g) Vessels operated by general agents of United States
      The permission granted by subsection (f) shall apply in the same
    manner and under the same conditions (including the obligation to
    comply with all requirements of State unemployment compensation
    laws) to general agents of the Secretary of Commerce with respect
    to service performed by officers and members of the crew on or in
    connection with American vessels -
        (1) owned by or bareboat chartered to the United States, and
        (2) whose business is conducted by such general agents.
    As to any such vessel, the State permitted to require contributions
    on account of such service shall be the State to which the general
    agent would make contributions if the vessel were operated for his
    own account.  Such general agents are designated, for this purpose,
    instrumentalities of the United States neither wholly nor partially
    owned by it and shall not be exempt from the tax imposed by section
    3301. The permission granted by this subsection is subject to the
    same conditions and limitations as are imposed in subsection (f),
    except that clause (B) of the second sentence of subsection (b)
    shall apply.
    (h) Requirement by State of contributions
      Any State may, as to service performed on account of which
    contributions are made pursuant to subsection (g) -
        (1) require contributions from persons performing such service
      under its unemployment compensation law or temporary disability
      insurance law administered in connection therewith, and
        (2) require general agents of the Secretary of Commerce to make
      contributions under such temporary disability insurance law and
      to make such deductions from wages or remuneration as are
      required by such unemployment compensation or temporary
      disability insurance law.
    (i) General agent as legal entity
      Each general agent of the Secretary of Commerce making
    contributions pursuant to subsection (g) or (h) shall, for purposes
    of such subsections, be considered a legal entity in his capacity
    as an instrumentality of the United States, separate and distinct
    from his identity as a person employing individuals on his own
    account.
    (j) Denial of credits in certain cases
      Any person required, pursuant to the permission granted by this
    section, to make contributions to an unemployment fund under a
    State unemployment compensation law approved by the Secretary of
    Labor under section 3304 shall not be entitled to the credits
    permitted, with respect to the unemployment compensation law of a
    State, by subsections (a) and (b) of section 3302 against the tax
    imposed by section 3301 for any taxable year if, on October 31 of
    such taxable year, the Secretary of Labor certifies to the
    Secretary of the Treasury his finding, after reasonable notice and
    opportunity for hearing to the State agency, that the unemployment
    compensation law of such State is inconsistent with any one or more
    of the conditions on the basis of which such permission is granted
    or that, in the application of the State law with respect to the
    12-month period ending on such October 31, there has been a
    substantial failure to comply with any one or more of such
    conditions.  For purposes of section 3310, a finding of the
    Secretary of Labor under this subsection shall be treated as a
    finding under section 3304(c).
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 445; Sept. 1, 1954, ch. 1212,
    Sec. 4(c), 68 Stat. 1135; Pub. L. 86-778, title V, Sec. 531(a),
    (b), Sept. 13, 1960, 74 Stat. 983; Pub. L. 91-373, title I, Sec.
    123, Aug. 10, 1970, 84 Stat. 702; Pub. L. 94-455, title XIX, Sec.
    1903(a)(15), 1906(b)(13)(C), Oct. 4, 1976, 90 Stat. 1809, 1834.)
 

Miscellaneous

                                 AMENDMENTS
      1976 - Subsec. (g). Pub. L. 94-455, Sec. 1903(a)(15)(A), struck
    out ''on or after July 1, 1953,'' after ''respect to service
    performed''.
      Subsec. (h). Pub. L. 94-455, 1903(a)(15)(B), struck out ''on or
    after July 1, 1953, and'' after ''as to service performed''.
      Subsec. (j). Pub. L. 94-455, Sec. 1903(a)(15)(C), 1906(b)(13)(C),
    struck out ''after December 31, 1971,'' after ''for any taxable
    year'' and substituted ''to the Secretary of the Treasury'' for
    ''to the Secretary''.
      1970 - Subsec. (j). Pub. L. 91-373 added subsec. (j).
      1960 - Subsec. (b). Pub. L. 86-778, Sec. 531(a), substituted
    ''(other than an instrumentality to which section 3306(c)(6)
    applies)'' for ''except such as are (1) wholly owned by the United
    States, or (2) exempt from the tax imposed by section 3301 by
    virtue of any other provision of law,'' and added cl. (C).
      Subsec. (g). Pub. L. 86-778, Sec. 531(b), substituted ''neither
    wholly nor partially'' for ''not wholly''.
      1954 - Subsec. (e). Act Sept. 1, 1954, repealed subsec. (e) which
    related to the Bonneville Power Administrator.
                      EFFECTIVE DATE OF 1960 AMENDMENT
      Section 535 of part 3 (Sec. 531-535) of title V of Pub. L. 86-778
    provided that: ''The amendments made by this part (enacting section
    3308 and amending this section and section 3306 of this title)
    (other than the amendments made by subsections (e) and (f) of
    section 531 (amending sections 1361 and 1367 of Title 42, The
    Public Health and Welfare)) shall apply with respect to
    remuneration paid after 1961 for services performed after 1961. The
    amendments made by subsections (e) and (f) of section 531 shall
    apply with respect to any week of unemployment which begins after
    December 31, 1960.'' (The second sentence of section 535 was
    repealed by Pub. L. 89-554, Sec. 8(a), Sept. 6, 1966, 80 Stat.
    661.)
                      EFFECTIVE DATE OF 1954 AMENDMENT
      Section 4(c) of act Sept. 1, 1954, provided that the amendment
    made by that section is effective with respect to services
    performed after Dec. 31, 1954.
      APPLICABILITY TO FEDERAL LAND BANKS, FEDERAL INTERMEDIATE CREDIT
                     BANKS, AND BANKS FOR COOPERATIVES
      Section 531(g) of Pub. L. 86-778, as amended by Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ''Notwithstanding section 203(b) of the Farm Credit Act of 1959,
    sections 3305(b), 3306(c)(6), and 3308 of the Internal Revenue Code
    of 1986 (formerly I.R.C. 1954), and sections 1501(a) and 1507(a) of
    the Social Security Act (sections 1361(a) and 1367 of Title 42, The
    Public Health and Welfare) shall be applicable, according to their
    terms, to the Federal land banks, Federal intermediate credit
    banks, and banks for cooperatives.''
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 3304, 3306 of this title;
    title 5 section 8501; title 42 section 503.