§ 3305. — Applicability of State law.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 26USC3305]
TITLE 26--INTERNAL REVENUE CODE
Subtitle C--Employment Taxes
CHAPTER 23--FEDERAL UNEMPLOYMENT TAX ACT
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).
(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, Secs. 1903(a)(15),
1906(b)(13)(C), Oct. 4, 1976, 90 Stat. 1809, 1834.)
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, Secs. 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 (Secs. 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.''
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.
