Bill Summary
The proposed legislation aims to amend the Internal Revenue Code of 1986 to safeguard small businesses from increases in unemployment insurance premiums that result from unpaid state advances. Specifically, it seeks to modify Section 3302(c) by introducing a provision that prevents the reduction of certain tax credits for small businesses with fewer than 500 employees. This means that if these businesses are facing increases in their unemployment insurance costs due to state advances that have not been repaid, they will not lose their eligibility for tax credits. The changes will take effect for taxable years starting after the legislation is enacted. Overall, the bill is designed to provide financial relief to small businesses during challenging economic times.
Possible Impacts
Here are three examples of how the proposed legislation could affect people:
1. **Small Business Owners**: The legislation specifically protects small businesses with fewer than 500 employees from increases in unemployment insurance premiums due to unpaid state advances. This means that small business owners will be able to maintain their current premium rates, potentially saving them significant costs during challenging economic times. This protection can help them allocate more resources towards growth, employee wages, or benefits rather than higher insurance premiums.
2. **Employees of Small Businesses**: By shielding small businesses from increased unemployment insurance costs, the legislation can indirectly benefit employees. If small businesses are able to avoid higher operational costs, they may have more financial flexibility to retain employees, avoid layoffs, or even hire additional staff. This can lead to greater job security and potentially better job opportunities for individuals working in these businesses.
3. **State Unemployment Insurance Funds**: The legislation could impact state unemployment insurance funds by limiting the ability to recover unpaid advances through increased premiums. This could affect the overall financial health of state unemployment systems, especially if many small businesses are unable to repay their advances. Consequently, the stability of unemployment benefits for all eligible individuals (including those not working for small businesses) may be influenced, potentially leading to broader economic ramifications if the fund's solvency is compromised.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1959 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 1959
To amend the Internal Revenue Code of 1986 to protect small businesses
from unemployment insurance premium increases by reason of unrepaid
State advances.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 6, 2025
Ms. Tenney (for herself and Mr. Smucker) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to protect small businesses
from unemployment insurance premium increases by reason of unrepaid
State advances.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. PROTECTION OF SMALL BUSINESS FROM UNEMPLOYMENT INSURANCE
PREMIUM INCREASES BY REASON OF UNREPAID STATE ADVANCES.
(a) In General.--Section 3302(c) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(4) Credits of Small Businesses Not Reduced by Reason of Unrepaid
Advances.--
``(A) In general.--Paragraph (2) shall not apply with
respect to any specified small business.
``(B) Specified small business.--For purposes of this
paragraph, the term `specified small business' means any
taxpayer if such taxpayer employs fewer than 500 employees as
of the close of the third quarter of the calendar year
immediately preceding the second consecutive January 1 referred
to in paragraph (2)(A)(i).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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