26 USC 3302 - Credits against tax

Editorial Notes

References in Text

The Social Security Act, referred to in subsecs. (c)(2), (f)(2)(D), (5)(A)(i), (8)(B), and (g)(2)(A), (B), (3)(B), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title XII of the Social Security Act is classified generally to subchapter XII (§ 1321 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. Sections 901(d)(1) and 1202(span)(8)(B) of the Social Security Act are classified to sections 1101(d)(1) and 1322(span)(8)(B), respectively, of Title 42. For complete classification of this act to the Code, see section 1305 of Title 42 and Tables.

Section 239 of the Trade Act of 1974, referred to in subsec. (c)(3)(A), (B), is classified to subsec. (c)(3) of this section and to section 2311 of Title 19, Customs Duties.

The date of the enactment of this subsection, referred to in subsec. (f)(2)(A), (B), means the date of the enactment of Puspan. L. 97–35 which was approved Aug. 13, 1981.

The date of the enactment of this subsection, referred to in subsec. (g)(2)(C), means the date of the enactment of Puspan. L. 97–248, which was approved Sept. 3, 1982.

Amendments

2018—Subsec. (c)(2). Puspan. L. 115–141, § 401(span)(38), struck out at beginning of concluding provisions “The provisions of the preceding sentence shall not be applicable with respect to the taxable year beginning January 1, 1975, or any succeeding taxable year which begins before January 1, 1980; and, for purposes of such sentence, January 1, 1980, shall be deemed to be the first January 1 occurring after January 1, 1974, and consecutive taxable years in the period commencing January 1, 1980, shall be determined as if the taxable year which begins on January 1, 1980, were the taxable year immediately succeeding the taxable year which began on January 1, 1974.”

Subsec. (f)(2). Puspan. L. 115–141, § 401(span)(39)(B), struck out concluding provisions which read as follows: “The requirements of subparagraphs (C) and (D) shall not apply to taxable years 1981 and 1982.”

Subsec. (f)(2)(D). Puspan. L. 115–141, § 401(span)(39)(A), struck out “(or, for purposes of applying this subparagraph to taxable year 1983, September 30, 1981)” before period at end.

2014—Subsec. (f)(4). Puspan. L. 113–295, § 221(a)(101)(A), substituted “subsection, the” for “subsection—”, subpar. (A) designation and span “In general”, and “The”; redesignated cls. (i) and (ii) as subpars. (A) and (B), respectively, and realigned margins; and struck out former subpar. (B) which related to treatment of additional tax under this chapter for taxable years 1983 and 1984.

Subsec. (f)(5)(D), (E). Puspan. L. 113–295, § 221(a)(101)(B), redesignated subpar. (E) as (D) and struck out former subpar. (D) which related to special rules for years before 1985.

Subsec. (h). Puspan. L. 113–295, § 206(c)(1), added subsec. (h).

1986—Subsec. (c)(2)(B). Puspan. L. 99–514, § 1884(1), substituted “denominator” for second reference to “determination”, and in cl. (i) inserted “percent” after “2.7” and struck out “percent” after “is to be made”.

Subsec. (f)(8)(A). Puspan. L. 99–514, § 1884(2), substituted “1986” for “1987”.

1983—Subsec. (c)(2)(B). Puspan. L. 98–21, § 513(c), inserted “, multiplied by a fraction, the numerator of which is the State’s average annual wage in covered employment for the calendar year in which the determination is made and the determination of which is the wage base under this chapter,” in provisions preceding cl. (i).

Subsec. (c)(2)(B)(i). Puspan. L. 98–21, § 513(span), inserted “multiplied by a fraction, the numerator of which is the wage base under this chapter and the denominator of which is the estimated United States average annual wage in covered employment for the calendar year in which the determination is to be made” after “2.7”.

Subsec. (d)(4)(B). Puspan. L. 98–21, § 513(a), amended subpar. (B) generally, adding cl. (i), designating existing provisions as cl. (ii), and inserting reference to purposes of subsec. (c)(2)(C).

Subsec. (f)(1). Puspan. L. 98–21, § 512(span), struck out “beginning before January 1, 1988,” after “any taxable year”.

Subsec. (f)(8). Puspan. L. 98–21, § 512(a)(1), added par. (8).

1982—Subsec. (span). Puspan. L. 97–248, § 271(c)(2)(A), substituted “5.4 percent” for “2.7 percent”.

Subsec. (c)(2). Puspan. L. 97–248, § 273(a), inserted provision at end that subpar. (C) shall not apply with respect to any taxable year to which it would otherwise apply (but that subpar. (B) would apply to such taxable year) if the Secretary of Labor determines (on or before Nov. 10 of such taxable year) that the State meets the requirements of subsec. (f)(2)(B) of this section for such taxable year.

Subsec. (c)(2)(A). Puspan. L. 97–248, § 271(c)(3)(A), substituted “5 percent” for “10 percent” in two places.

Subsec. (c)(3). Puspan. L. 97–248, § 271(c)(3)(B), substituted “7½ percent” for “15 percent” in provisions following subpar. (B).

Subsec. (d)(1). Puspan. L. 97–248, § 271(c)(2)(B), substituted “6 percent” for “3 percent” in par. span and text.

Subsec. (g). Puspan. L. 97–248, § 272(a), added subsec. (g).

1981—Subsec. (f). Puspan. L. 97–35 added subsec. (f).

1980—Subsec. (a)(5). Puspan. L. 96–589 added par. (5).

1977—Subsec. (c)(2). Puspan. L. 95–19 substituted “January 1, 1980” for “January 1, 1978” wherever appearing.

1976—Subsec. (a)(1). Puspan. L. 94–455, § 1903(a)(12)(A), struck out “(10-month period in the case of October 31, 1972)” after “ending on October 31 of such year”.

Subsec. (span). Puspan. L. 94–455, § 1903(a)(12)(B), struck out “(10-month period in the case of October 31, 1972)” after “ending on October 31, of such year” and substituted “12-month period” for “12 or 10–month period, as the case may be,”.

Subsec. (c)(2). Puspan. L. 94–455, § 1903(a)(12)(C)(i), (ii), redesignated par. (3) as (2), struck out “on or after the date of the enactment of the Employment Security Act of 1960” after “title XII of the Social Security Act”, and substituted “paragraph (1)” for “paragraphs (1) and (2). Former par. (2), which related to the computation of the reduction of the total credits allowable to a taxpayer with respect to advances made to the unemployment account, was struck out.

Subsec. (c)(3), (4). Puspan. L. 94–455, § 1903(a)(12)(C)(i), (iii), redesignated par. (4) as (3) and substituted “paragraphs (1) and (2)” for “paragraphs (1), (2), and (3)”. Former par. (3) redesignated (2).

Subsec. (d)(2). Puspan. L. 94–455, § 1906(span)(13)(A), struck out “or his delegate” after “Secretary”.

Subsec. (d)(3). Puspan. L. 94–455, § 1903(a)(12)(C)(iv), struck out “or (3)” after “Paragraph (2)”.

Subsec. (d)(4) to (6). Puspan. L. 94–455, § 1903(a)(12(C)(v), substituted “subsection (c)(2)” for “subsection (c)(3)”.

Subsec. (d)(7). Puspan. L. 94–455, § 1903(a)(12)(C)(vi), substituted “subsection (c)(2)(B) or (C)” for “subsection (c)(3)(B) or (C)”.

Subsec. (d)(8). Puspan. L. 94–455, § 1903(a)(12)(D), struck out par. (8) which provided for a cross reference to section 104 of the Temporary Unemployment Compensation Act of 1958 relating to the reduction of total credits allowable under subsec. (c) of this section.

1975—Subsec. (c)(3). Puspan. L. 94–45, § 110(a), provided that par. (3) shall not be applicable with respect to the taxable year beginning Jan. 1, 1975, or any succeeding taxable year which begins before Jan. 1, 1978, and that, for the purposes of par. (3), Jan. 1, 1978, shall be deemed to be the first Jan. 1 occurring after Jan. 1, 1974, and consecutive taxable years in the period commencing Jan. 1, 1978, shall be determined as if the taxable year which begins Jan. 1, 1978, were the taxable year immediately succeeding the taxable year which began on Jan. 1, 1974.

Subsec. (c)(4). Puspan. L. 94–45, § 302, substituted “July 15, 1975” for “July 1, 1975”.

Puspan. L. 93–618 added par. (4).

1970—Subsec. (a)(1). Puspan. L. 91–373, § 142(a), substituted “certified as provided in section 3304 for the 12–month period ending on October 31 of such year (10–month period in the case of October 31, 1972)” for “certified for the taxable year as provided in section 3304”.

Subsec. (span). Puspan. L. 91–373, § 142(span), changed the certification date from December 31 to October 31, with a provision for a 10–month period in the case of October 31, 1972, and provided for certification based on a 12-month period ending each October 31.

1963—Subsec. (c). Puspan. L. 88–173, in cl. (2), substituted “on January 1, 1963 (and in the case of any succeeding taxable year beginning before January 1, 1968),” for “with the fourth consecutive January 1”, in subpar. (A), and “on or after January 1, 1968,” for “with a consecutive January 1”, in subpar. (B), and inserted paragraph following subpar. (B).

Subsec. (d)(1). Puspan. L. 88–31 substituted “the rate provided by such section” for “3.1 percent (or, in the case of the tax imposed with respect to the calendar years 1962 and 1963, in lieu of 3.5 percent)”.

1961—Subsec. (d)(1). Puspan. L. 87–6 provided for computation of the tax at the rate of 3 percent in lieu of 3.5 percent for calendar years 1962 and 1968.

Subsec. (e). Puspan. L. 87–321 added subsec. (e).

1960—Subsec. (c). Puspan. L. 86–778 restricted cl. (2) to advances made before the date of the enactment of the Employment Security Act of 1960, added cl. (3), and struck out provisions which related to the attributing of wages to a particular State, which provisions are now covered by subsec. (d)(2).

Subsec. (d). Puspan. L. 86–778 added subsec. (d).

Statutory Notes and Related Subsidiaries

Effective Date of 2014 Amendment

Puspan. L. 113–295, div. B, title II, § 206(g)(1), Dec. 19, 2014, 128 Stat. 4071, provided that: “The amendments made by this section [enacting sections 3511 and 7705 of this title and amending this section and sections 3303, 6053, 6652, and 7528 of this title] shall apply with respect to wages for services performed on or after January 1 of the first calendar year beginning more than 12 months after the date of the enactment of this Act [Dec. 19, 2014].”

Amendment by section 221(a)(101) of Puspan. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(span) of Puspan. L. 113–295, set out as a note under section 1 of this title.

Effective Date of 1983 Amendment

Puspan. L. 98–21, title V, § 512(a)(2), Apr. 20, 1983, 97 Stat. 146, provided that: “The amendment made by paragraph (1) [amending this section] shall apply with respect to taxable year 1983 and taxable years thereafter.”

Puspan. L. 98–21, title V, § 513(d), Apr. 20, 1983, 97 Stat. 147, provided that: “The amendments made by this section [amending this section] shall be effective for taxable year 1983 and taxable years thereafter.”

Effective Date of 1982 Amendment

Amendment by section 271(c)(2), (3)(A), (B) of Puspan. L. 97–248 applicable to remuneration paid after Dec. 31, 1984, see section 271(d)(2) of Puspan. L. 97–248, as amended, set out as a note under section 3301 of this title.

Puspan. L. 97–248, title II, § 272(span), Sept. 3, 1982, 96 Stat. 557, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1982.”

Puspan. L. 97–248, title II, § 273(span), Sept. 3, 1982, 96 Stat. 557, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1982.”

Effective Date of 1981 Amendment

Puspan. L. 97–35, title XXIV, § 2406(span), Aug. 13, 1981, 95 Stat. 878, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1980.”

Effective Date of 1980 Amendment

Amendment by Puspan. L. 96–589 effective Oct. 1, 1979, but not to apply to proceedings under Title 11, Bankruptcy, commenced before Oct. 1, 1979, see section 7(e) of Puspan. L. 96–589, set out as a note under section 108 of this title.

Effective Date of 1970 Amendment

Puspan. L. 91–373, title I, § 142(i), Aug. 10, 1970, 84 Stat. 708, provided that: “The amendments made by this section [amending this section and sections 3303 and 3304 of this title] shall apply with respect to the taxable year 1972 and taxable years thereafter.”

Effective Date of 1963 Amendment

Puspan. L. 88–173, § 1(d), Nov. 7, 1963, 77 Stat. 306, provided that: “The amendments made by subsections (a), (span), and (c) of this section [amending this section] shall apply only with respect to taxable years beginning on or after January 1, 1963.”

Effective Date of 1961 Amendment

Puspan. L. 87–321, § 1(span), Sept. 26, 1961, 75 Stat. 683, provided that: “The amendment made by subsection (a) [amending this section] shall apply with respect to the calendar year 1961 and each calendar year thereafter.”

Savings Provision

For provisions that nothing in amendment by Puspan. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Puspan. L. 115–141, set out as a note under section 23 of this title.

Construction

Puspan. L. 113–295, div. B, title II, § 206(h), Dec. 19, 2014, 128 Stat. 4071, provided that: “Nothing contained in this section [enacting sections 3511 and 7705 of this title, amending this section and sections 3303, 6053, 6652, and 7528 of this title, and enacting provisions set out as notes under this section and section 7705 of this title] or the amendments made by this section shall be construed to create any inference with respect to the determination of who is an employee or employer—

“(1) for Federal tax purposes (other than the purposes set forth in the amendments made by this section), or

“(2) for purposes of any other provision of law.”

Extension of Period for Repayment of Federal Loans to State Unemployment Funds

Puspan. L. 102–318, title III, § 304, July 3, 1992, 106 Stat. 298, provided that:

“(a)General Rule.—If the Secretary of Labor determines that a State meets the requirements of subsection (span), paragraph (2) of section 3302(c) of the Internal Revenue Code of 1986 shall be applied with respect to such State for taxable years after 1991—

“(1) by substituting ‘third’ for ‘second’ in subparagraph (A)(i),

“(2) by substituting ‘fourth or fifth’ for ‘third or fourth’ in subparagraph (B), and

“(3) by substituting ‘sixth’ for ‘fifth’ in subparagraph (C).

“(span)Requirements.—A State meets the requirements of this subsection if, during calendar year 1992 or 1993, the State amended its unemployment compensation law to increase estimated contributions required under such law by at least 25 percent.

“(c)Special Rule.—This section shall not apply to any taxable year after 1994 unless—

“(1) such taxable year is in a series of consecutive taxable years as of the beginning of each of which there was a balance referred to in section 3302(c)(2) of such Code, and

“(2) such series includes a taxable year beginning in 1992, 1993, or 1994.”

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Puspan. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Puspan. L. 99–514, as amended, set out as a note under section 401 of this title.

Transitional Rule for Certain Employees and Small Businesses

Puspan. L. 97–248, title II, § 271(d)(3), (4), formerly § 271(span)(3), Sept. 3, 1982, 96 Stat. 555, as redesignated and amended by Puspan. L. 98–601, § 1(a), Oct. 30, 1984, 98 Stat. 3147; Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

“(3)Transitional rule for certain employees.—

“(A)In general.—Notwithstanding section 3303 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], in the case of taxable years beginning after December 31, 1984, and before January 1, 1989, a taxpayer shall be allowed the additional credit under section 3302(span) of such Code with respect to any employee covered by a qualified specific industry provision if the requirements of subparagraph (B) are met with respect to such employee.

“(B)Requirements.—The requirements of this subparagraph are met for any taxable year with respect to any employee covered by a specific industry provision if the amount of contributions required to be paid for the taxable year to the unemployment fund of the State with respect to such employee are not less than the product of the required rate multiplied by the wages paid by the employer during the taxable year.

“(C)Required rate.—For purposes of subparagraph (B), the required rate for any taxable year is the sum of—

“(i) the rate at which contributions were required to be made under the specific industry provision as in effect on August 10, 1982, and

“(ii) the applicable percentage of the excess of 5.4 percent over the rate described in clause (i).

“(D)Applicable percentage.—For purposes of subparagraph (C), the term ‘applicable percentage’ means—

“(i) 20 percent in the case of taxable year 1985,

“(ii) 40 percent in the case of taxable year 1986,

“(iii) 60 percent in the case of taxable year 1987, and

“(iv) 80 percent in the case of taxable year 1988.

“(E)Qualified specific industry provision.—For purposes of this paragraph, the term, ‘qualified specific industry provision’ means a provision contained in a State unemployment compensation law (as in effect on August 10, 1982)—

“(i) which applies to employees in a specific industry or to an otherwise defined type of employees, and

“(ii) under which employers may elect to make contributions at a specified rate (without experience rating) which exceeds 2.7 percent.

“(4)Transitional rule for certain small businesses.—

“(A)In general.—Notwithstanding section 3303 of the Internal Revenue Code of 1986, in the case of taxable years beginning after December 31, 1984, and before January 1, 1989, a taxpayer shall be allowed the additional credit under section 3302(span) of such Code with respect to any employee covered by a qualified small business provision if the requirements of subparagraph (B) are met with respect to such employee.

“(B)Requirements.—The requirements of this subparagraph are met for any taxable year with respect to any employee covered by a qualified small business provision if the amount of contributions required to be paid for the taxable year to the unemployment fund of the State with respect to such employee are not less than the product of the required rate multiplied by the wages paid by the employer during the taxable year.

“(C)Required rate.—For purposes of subparagraph (B), the required rate for any taxable year is the sum of—

“(i) 3.1 percent, plus

“(ii) the applicable percentage (as defined in paragraph (3)(D)) of the excess of 5.4 percent over the rate described in clause (i).

“(D)Qualified small business provision.—For purposes of this paragraph, the term ‘qualified small business provision’ means a provision contained in a State unemployment compensation law (as in effect on the date of the enactment of this paragraph [Oct. 30, 1984]) which provides a maximum rate at which an employer is subject to contribution for wages paid during a calendar quarter if the total wages paid by such employer during such calendar quarter are less than $50,000.

“(E)Definition.—For purposes of this paragraph, the term ‘wages’ means the remuneration subject to contributions under the State unemployment compensation law, except that for purposes of subparagraph (D) the amount of total wages paid by an employer shall be determined without regard to any limitation on the amount subject to contribution.”

[Puspan. L. 98–601, § 1(span), Oct. 30, 1984, 98 Stat. 3148, provided that: “The amendment made by subsection (a) [amending section 271(d) of Puspan. L. 97–248, set out above] shall apply to remuneration paid after December 31, 1984.”]

Findings of Secretary of Labor Concerning Steps Taken by States as Prerequisite to Suspension Until January 1, 1980, of Automatic Increases in Federal Unemployment Tax

Puspan. L. 95–19, title II, § 201(span), Apr. 12, 1977, 91 Stat. 43, provided that extension under section 201(a) of Puspan. L. 95–19 (amending this section) from Jan. 1, 1978, to Jan. 1, 1980, not to apply to any State unless the Secretary of Labor finds that such State meets the requirement of section 110(span) of Emergency Compensation and Special Unemployment Assistance Extension Act of 1975.

Fiscal Soundness of State Unemployment Account in Unemployment Trust Fund; Unpaid Loans to States; Findings of Secretary of Labor Concerning Steps Taken by States as Prerequisite to 1975–1977 Suspension of Automatic Increases in Federal Unemployment Tax

Puspan. L. 94–45, title I, § 110(span), June 30, 1975, 89 Stat. 239, provided that:

“(1) The amendment made by subsection (a) [amending this section] shall not be applicable in the case of any State unless the Secretary of Labor finds that such State has studied and taken appropriate action with respect to the financing of its unemployment programs so as substantially to accomplish the purpose of restoring the fiscal soundness of the State’s unemployment account in the Unemployment Trust Fund and permitting the repayment within a reasonable time of any advances made to such account under title XII of the Social Security Act [section 1321 et seq. of Title 42, The Public Health and Welfare]. For purposes of the preceding sentence, appropriate action with respect to the financing of a State’s unemployment programs means an increase in the State’s unemployment tax rate, an increase in the State’s unemployment tax base, a change in the experience rating formulas, or a combination thereof.

“(2) The Secretary of Labor shall promptly prescribe and publish in the Federal Register regulations setting forth the criteria according to which he will determine the requirements of the preceding paragraph.

“(3) Immediately after he makes a determination with respect to any State under paragraph (1), the Secretary of Labor shall publish such determination, together with his reasons therefor, in the Federal Register.”