Congressional Accountability Tracker

House Report 119-509 - NEW OPPORTUNITIES FOR BUSINESS OWNERSHIP AND SELF-SUFFICIENCY ACT

[House Report 119-509]
[From the U.S. Government Publishing Office]

119th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 119-509

=======================================================================

NEW OPPORTUNITIES FOR BUSINESS OWNERSHIP
AND SELF-SUFFICIENCY ACT

----------------

February 20, 2026.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed

----------------

Mr. Smith of Missouri, from the Committee on Ways and Means,
submitted the following

R E P O R T

[To accompany H.R. 6431]

The Committee on Ways and Means, to whom was referred the
bill (H.R. 6431) to amend the Internal Revenue Code of 1986 to
modify the rules governing the State administration of self-
employment assistance programs, having considered the same,
reports favorably thereon with an amendment and recommends that
the bill as amended do pass.

CONTENTS

Page
I. SUMMARY AND BACKGROUND...........................................2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 2
C. Legislative History................................. 3
D. Designated Hearing.................................. 4
II. EXPLANATION OF THE BILL..........................................4
A. Reasons for Change.................................. 4
B. Explanation of Provisions........................... 4
C. Effective Date...................................... 5
III. VOTES OF THE COMMITTEE...........................................5
IV. BUDGET EFFECTS OF THE BILL.......................................6
A. Committee Estimate of Budgetary Effects............. 6
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 6
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 6
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......7
A. Committee Oversight Findings and Recommendations.... 7
B. Statement of General Performance Goals and
Objectives......................................... 7
C. Information Relating to Unfunded Mandates........... 7
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 7
E. Duplication of Federal Programs..................... 7
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............7

The amendment is as follows:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``New Opportunities for Business
Ownership and Self-Sufficiency Act''.

SEC. 2. MODIFICATION OF RULES GOVERNING STATE ADMINISTRATION OF SELF-
EMPLOYMENT ASSISTANCE PROGRAMS.

(a) Elimination of Requirement That Participants Are Likely to
Exhaust Regular Unemployment Compensation.--Section 3306(t)(3) of the
Internal Revenue Code of 1986 is amended by striking subparagraph (B)
and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and
(C), respectively.
(b) Modification of Requirement To Participate in Self-Employment
Assistance Activities.--Section 3306(t)(3)(B) of such Code, as
redesignated by subsection (a), is amended to read as follows:
``(B) are participating in self-employment assistance
activities which are approved by the State agency and
either--
``(i) include entrepreneurial training,
business counseling, and technical assistance;
or
``(ii) are performed pursuant to a business
plan and market feasibility study submitted by
the individual and approved by the State or an
agency designated by the State; and''.
(c) Weekly Certification Requirement.--Section 3306(t)(3)(C) of such
Code, as redesignated by subsection (a), is amended by inserting ``and
are certifying such activities on at least a weekly basis to an agency
designated by the State'' before the semicolon at the end.
(d) Adjustment of Limitation on Number of Individuals
Participating.--Section 3306(t)(4) of such Code is amended by striking
``5'' and inserting ``10''.
(e) Effective Date.--The amendments made by this section shall apply
beginning on the date that is 2 years after the date of enactment of
this Act, except that nothing in this section shall be interpreted to
prevent a State from amending its law before the end of the 2-year
period beginning on the date of the enactment of this Act.
(f) Issuance of Regulations.--The Secretary of Labor shall, after
public notice and comment and subject to approval by the Office of
Management and Budget, adopt regulations to administer this Act.
(g) Issuance of Guidance.--The Secretary of Labor shall provide
guidance to State workforce agencies that includes--
(1) a model list of self-employment assistance activities
that fulfill requirements of the program under section 3306(t)
of the Internal Revenue Code of 1986; and
(2) best practices for verification of completion of such
activities.

I. SUMMARY AND BACKGROUND

A. Purpose and Summary

H.R. 6431, as amended, the ``New Opportunities for Business
Ownership and Self-Sufficiency Act,'' as ordered reported by
the Committee on Ways and Means on January 14, 2026, makes
changes to the Self-Employment Assistance (SEA) program to
improve state utilization of the SEA program, strengthen
accountability and expand eligibility to a larger pool of
unemployment claimants. The bill makes modifications to the SEA
program to increase state flexibility and expand access to help
more claimants find re-employment through self-employment or
small business ownership as an alternative career pathway.

B. Background and Need for Legislation

The Unemployment Insurance (UI) program is a federal-state
partnership to provide earned benefits to individuals who lose
their job through no fault of their own. SEA was created in
1993 and offers qualifying UI claimants the opportunity for re-
employment through self-employment and entrepreneurship. The
program is designed to allow UI claimants to create their own
jobs by starting their own small businesses. States operating
an SEA program can pay an SEA allowance, equal to regular
weekly UI benefits, while claimants are working to establish
their own businesses and become self-employed. This is an
alternative pathway than traditional UI claimants, who are
required to actively search for work in the private sector as a
condition of receipt of benefits. The program recognizes that
self-employment is a viable path toward re-employment for some
individuals, particularly with the growth of gig workers and
independent contractors in today's economy.
For an individual to receive these benefits, they must
first be eligible to receive regular UI under state law. SEA
participants are required to be actively engaged on a full-time
basis in self-employment assistance activities relating to the
establishment of a business plan, entrepreneurial training, and
business counseling. A state may allow up to 5 percent of UI
claimants to participate in SEA. Currently, the program is
limited to claimants who are most likely to exhaust their
weekly benefits (most states provide UI benefits for up to 26
weeks).
A comprehensive evaluation of state SEA programs concluded
that SEA participants were 19 times more likely than eligible
non-participants in sample states to be self-employed at any
point after their period of unemployment.\1\ The study also
found that SEA program participants were four times more likely
to have obtained any type of employment (i.e., self-employment
or wage/salary employment) than eligible non-participants.\2\
Lastly, SEA program participants reported high levels of
satisfaction with self-employment and the training they
received as part of the SEA program.\3\
---------------------------------------------------------------------------
\1\ William T. Kosanovich and Heather Fleck, DTI Associates, Inc,
``Final Report Comprehensive Assessment of Self-Employment Assistance
Programs,'' https://cameonetwork.org/wp-content /uploads/2012/02/2001-
06_CompAssessSelf-EmploymntAssistProg_DTIAssociates.pdf, June 2001.
\2\ Ibid.
\3\ Ibid.
---------------------------------------------------------------------------
There are currently eight states that have an SEA program:
Delaware, Mississippi, New Hampshire, New Jersey, New York,
Oregon, Pennsylvania, and Rhode Island. As an example,
H.R. 6431 makes changes to improve state utilization of the
SEA program, strengthen accountability and expand eligibility
to a larger pool of UI claimants. The bill increases the
participation cap from 5 to 10 percent and expands eligibility
to all UI claimants, not just those determined most likely to
exhaust their benefits. The bill also adds accountability
provisions to require a business plan and market feasibility
study be submitted by the individual and approved by the state.
It also requires participants to certify self-employment
assistance activities to the state agency for approval on a
weekly basis.

C. Legislative History

Background

H.R. 6431 was introduced on December 4, 2025, and was
referred to the Committee on Ways and Means. The bill was
previously introduced in the 118th Congress (H.R. 8605).

Committee Hearings

The Committee on Ways and Means held the following
hearing(s) concerning the policy in H.R. 6431:
On June 4, 2024, the Committee on Ways and Means Work and
Welfare Subcommittee held a hearing titled, ``Reforming
Unemployment Insurance to Support American Workers and
Businesses,'' to hear from expert witnesses on key areas in
need of reform in the UI program.

Committee Action

The Committee on Ways and Means marked up H.R. 6431, the
``New Opportunities for Business Ownership and Self-Sufficiency
Act,'' on January 14, 2026, and favorably reported the bill, as
amended, to the House of Representatives (with quorum being
present).

D. Designated Hearing

Pursuant to clause 3(c)(6) of rule XIII, the following
hearing was used to develop and consider H.R. 6431: ``Reforming
Unemployment Insurance to Support American Workers and
Businesses'' hearing held on June 4, 2024.

II. EXPLANATION OF THE BILL

A. Reasons for Change

The Committee believes that making changes to the SEA
program will improve state utilization, strengthen
accountability and expand eligibility to a larger pool of UI
claimants while expanding opportunities for unemployed workers
to create small businesses and strengthen local economies.

B. Explanation of Provisions

Section 1. This section provides the short title, ``New
Opportunities for Business Ownership and Self-Sufficiency
Act.''
Section 2. Eliminates a requirement that, in order to
participate in the Self-Employment Assistance (SEA) program, an
individual must be identified by the state worker profiling
system as likely to exhaust their benefits.
Section 3. Modifies eligibility requirements for
participation in self-employment activities to require approval
by the state, and to include entrepreneurial training, business
counseling, and technical assistance, or activities performed
pursuant to a business plan and market feasibility study
submitted by the individual and approved by the state.
Section 4. Adds a weekly certification requirement for
verification of participation in self-employment assistance
activities to be approved by the state.
Section 5. Increases the SEA participation cap from 5 to 10
percent.
Section 6. Provides an effective date to be the date on
which a state amends its state law, but not later than two
years after the date of enactment.
Section 7. Requires the Department of Labor to issue
regulations through notice and comment rulemaking to implement
the changes made by the Act.

C. Effective Date

The bill would become effective to the date on which a
state amends its state law, but not later than two years after
the date of enactment.

III. VOTES OF THE COMMITTEE

In compliance with the Rules of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 6431, the ``New Opportunities for
Business Ownership and Self-Sufficiency Act'' on January 14,
2026.
The vote on the amendment offered by Mr. Beyer to the
amendment in the nature of a substitute to H.R. 6431, which
would require the Secretary of Labor to report to Congress on
state recession preparedness, expansion or establishment of
SEAP programs as it relates to the likelihood of overpayments
of weekly unemployed compensation, and Tiger Team-recommended
program integrity investments was not agreed to by a roll call
vote of 18 yeas to 23 nays (with a quorum being present). The
vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)..................... ...... X ......... Mr. Neal............. X ...... .........
Mr. Buchanan....................... ...... X ......... Mr. Doggett.......... X ...... .........
Mr. Smith (NE)..................... ...... X ......... Mr. Thompson......... X ...... .........
Mr. Kelly.......................... ...... X ......... Mr. Larson........... X ...... .........
Mr. Schweikert..................... ...... X ......... Mr. Davis............ X ...... .........
Mr. LaHood......................... ...... ...... ......... Ms. Sanchez.......... X ...... .........
Mr. Arrington...................... ...... X ......... Ms. Sewell........... ...... ...... .........
Mr. Estes.......................... ...... X ......... Ms. DelBene.......... X ...... .........
Mr. Smucker........................ ...... ...... ......... Ms. Chu.............. X ...... .........
Mr. Hern........................... ...... X ......... Ms. Moore (WI)....... X ...... .........
Mrs. Miller (WV)................... ...... X ......... Mr. Boyle............ X ...... .........
Dr. Murphy......................... ...... ...... ......... Mr. Beyer............ X ...... .........
Mr. Kustoff........................ ...... X ......... Mr. Evans............ X ...... .........
Mr. Fitzpatrick.................... ...... X ......... Mr. Schneider........ X ...... .........
Mr. Steube......................... ...... ...... ......... Mr. Panetta.......... X ...... .........
Ms. Tenney......................... ...... X ......... Mr. Gomez............ X ...... .........
Mrs. Fischbach..................... ...... X ......... Mr. Horsford......... X ...... .........
Mr. Moore (UT)..................... ...... X ......... Ms. Plaskett......... X ...... .........
Ms. Van Duyne...................... ...... X ......... Mr. Suozzi........... X ...... .........
Mr. Feenstra....................... ...... X .........
Ms. Malliotakis.................... ...... X .........
Mr. Carey.......................... ...... X .........
Mr. Yakym.......................... ...... X .........
Mr. Miller (OH).................... ...... ...... .........
Mr. Bean........................... ...... X .........
Mr. Moran.......................... ...... X .........
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)..................... X ...... ......... Mr. Neal............. X ...... .........
Mr. Buchanan....................... X ...... ......... Mr. Doggett.......... X ...... .........
Mr. Smith (NE)..................... X ...... ......... Mr. Thompson......... X ...... .........
Mr. Kelly.......................... X ...... ......... Mr. Larson........... X ...... .........
Mr. Schweikert..................... X ...... ......... Mr. Davis............ X ...... .........
Mr. LaHood......................... ...... ...... ......... Ms. Sanchez.......... X ...... .........
Mr. Arrington...................... X ...... ......... Ms. Sewell........... ...... ...... .........
Mr. Estes.......................... X ...... ......... Ms. DelBene.......... X ...... .........
Mr. Smucker........................ X ...... ......... Ms. Chu.............. X ...... .........
Mr. Hern........................... X ...... ......... Ms. Moore (WI)....... X ...... .........
Mrs. Miller (WV)................... X ...... ......... Mr. Boyle............ X ...... .........
Dr. Murphy......................... ...... ...... ......... Mr. Beyer............ X ...... .........
Mr. Kustoff........................ X ...... ......... Mr. Evans............ X ...... .........
Mr. Fitzpatrick.................... X ...... ......... Mr. Schneider........ X ...... .........
Mr. Steube......................... ...... ...... ......... Mr. Panetta.......... X ...... .........
Ms. Tenney......................... X ...... ......... Mr. Gomez............ X ...... .........
Mrs. Fischbach..................... X ...... ......... Mr. Horsford......... X ...... .........
Mr. Moore (UT)..................... X ...... ......... Ms. Plaskett......... X ...... .........
Ms. Van Duyne...................... X ...... ......... Mr. Suozzi........... X ...... .........
Mr. Feenstra....................... X ...... .........
Ms. Malliotakis.................... X ...... .........
Mr. Carey.......................... X ...... .........
Mr. Yakym.......................... X ...... .........
Mr. Miller (OH).................... X ...... .........
Mr. Bean........................... X ...... .........
Mr. Moran.......................... X ...... .........
----------------------------------------------------------------------------------------------------------------

IV. BUDGET EFFECTS OF THE BILL

A. Committee Estimate of Budgetary Effects

With respect to clause 3(d) of rule XIII of the Rules of
the House of Representatives, a cost estimate provided by the
Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974 was not made available to the
Committee in time for the filing of this report.

B. Statement Regarding New Budget Authority and
Tax Expenditures Budget Authority

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involved no new or increased budget authority. The
Committee states further that the bill involves no new or
increased tax expenditures.

C. Cost Estimate Prepared by the
Congressional Budget Office

With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has requested
but not received a cost estimate for this bill from the
Director of Congressional Budget Office. The Chairman of the
Committee shall cause such estimate and statement to be printed
in the Congressional Record upon its receipt by the Committee.

V. OTHER MATTERS TO BE DISCUSSED UNDER
THE RULES OF THE HOUSE

A. Committee Oversight Findings and Recommendations

With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives, the Committee made findings and
recommendations that are reflected in this report.

B. Statement of General Performance Goals and Objectives

With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill does not authorize funding, so no statement of general
performance goals and objectives is required.

C. Information Relating to Unfunded Mandates

This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.

D. Congressional Earmarks, Limited Tax Benefits,
and Limited Tariff Benefits

With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.

E. Duplication of Federal Programs

In compliance with clause 3(c)(5) of rule XIII of the rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).

VI. CHANGES IN EXISTING LAW MADE BY THE BILL,
AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows.

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

* * * * * * *

Subtitle C--Employment Taxes

* * * * * * *

CHAPTER 23--FEDERAL UNEMPLOYMENT TAX ACT

* * * * * * *

SEC. 3306. DEFINITIONS.

(a) Employer.--For purposes of this chapter--
(1) In general.--The term ``employer'' means, with
respect to any calendar year, any person who--
(A) during any calendar quarter in the
calendar year or the preceding calendar year
paid wages of $1,500 or more, or
(B) on each of some 20 days during the
calendar year or during the preceding calendar
year, each day being in a different calendar
week, employed at least one individual in
employment for some portion of the day.
For purposes of this paragraph, there shall not be
taken into account any wages paid to, or employment of,
an employee performing domestic services referred to in
paragraph (3).
(2) Agricultural labor.--In the case of agricultural
labor, the term ``employer'' means, with respect to any
calendar year, any person who--
(A) during any calendar quarter in the
calendar year or the preceding calendar year
paid wages of $20,000 or more for agricultural
labor, or
(B) on each of some 20 days during the
calendar year or during the preceding calendar
year, each day being in a different calendar
week, employed at least 10 individuals in
employment in agricultural labor for some
portion of the day.
(3) Domestic service.--In the case of domestic
service in a private home, local college club, or local
chapter of a college fraternity or sorority, the term
``employer'' means, with respect to any calendar year,
any person who during any calendar quarter in the
calendar year or the preceding calendar year paid wages
in cash of $1,000 or more for such service.
(4) Special rule.--A person treated as an employer
under paragraph (3) shall not be treated as an employer
with respect to wages paid for any service other than
domestic service referred to in paragraph (3) unless
such person is treated as an employer under paragraph
(1) or (2) with respect to such other service.
(b) Wages.--For purposes of this chapter, the term ``wages''
means all remuneration for employment, including the cash value
of all remuneration (including benefits) paid in any medium
other than cash; except that such term shall not include--
(1) that part of the remuneration which, after
remuneration (other than remuneration referred to in
the succeeding paragraphs of this subsection) equal to
$7,000 with respect to employment has been paid to an
individual by an employer during any calendar year, is
paid to such individual by such employer during such
calendar year. If an employer (hereinafter referred to
as successor employer) during any calendar year
acquires substantially all the property used in a trade
or business of another employer (hereinafter referred
to as a predecessor), or used in a separate unit of a
trade or business of a predecessor, and immediately
after the acquisition employs in his trade or business
an individual who immediately prior to the acquisition
was employed in the trade or business of such
predecessor, then, for the purpose of determining
whether the successor employer has paid remuneration
(other than remuneration referred to in the succeeding
paragraphs of this subsection) with respect to
employment equal to $7,000 to such individual during
such calendar year, any remuneration (other than
remuneration referred to in the succeeding paragraphs
of this subsection) with respect to employment paid (or
considered under this paragraph as having been paid) to
such individual by such predecessor during such
calendar year and prior to such acquisition shall be
considered as having been paid by such successor
employer;
(2) the amount of any payment (including any amount
paid by an employer for insurance or annuities, or into
a fund, to provide for any such payment) made to, or on
behalf of, an employee or any of his dependents under a
plan or system established by an employer which makes
provision for his employees generally (or for his
employees generally and their dependents) or for a
class or classes of his employees (or for a class or
classes of his employees and their dependents), on
account of--
(A) sickness or accident disability (but, in
the case of payments made to an employee or any
of his dependents, this subparagraph shall
exclude from the term ``wages'' only payments
which are received under a workmen's
compensation law), or
(B) medical or hospitalization expenses in
connection with sickness or accident
disability, or
(C) death;
(4) any payment on account of sickness or accident
disability, or medical or hospitalization expenses in
connection with sickness or accident disability, made
by an employer to, or on behalf of, an employee after
the expiration of 6 calendar months following the last
calendar month in which the employee worked for such
employer;
(5) any payment made to, or on behalf of, an employee
or his beneficiary--
(A) from or to a trust described in section
401(a) which is exempt from tax under section
501(a) at the time of such payment unless such
payment is made to an employee of the trust as
remuneration for services rendered as such
employee and not as a beneficiary of the trust,
or
(B) under or to an annuity plan which, at the
time of such payment, is a plan described in
section 403(a),
(C) under a simplified employee pension (as
defined in section 408(k)(1)), other than any
contributions described in section 408(k)(6),
(D) under or to an annuity contract described
in section 403(b), other than a payment for the
purchase of such contract which is made by
reason of a salary reduction agreement (whether
evidenced by a written instrument or
otherwise),
(E) under or to an exempt governmental
deferred compensation plan (as defined in
section 3121(v)(3)),
(F) to supplement pension benefits under a
plan or trust described in any of the foregoing
provisions of this paragraph to take into
account some portion or all of the increase in
the cost of living (as determined by the
Secretary of Labor) since retirement but only
if such supplemental payments are under a plan
which is treated as a welfare plan under
section 3(2)(B)(ii) of the Employee Retirement
Income Security Act of 1974,
(G) under a cafeteria plan (within the
meaning of section 125) if such payment would
not be treated as wages without regard to such
plan and it is reasonable to believe that (if
section 125 applied for purposes of this
section) section 125 would not treat any wages
as constructively received, or
(H) under an arrangement to which section
408(p) applies, other than any elective
contributions under paragraph (2)(A)(i)
thereof,
(6) the payment by an employer (without deduction
from the remuneration of the employee)--
(A) of the tax imposed upon an employee under
section 3101, or
(B) of any payment required from an employee
under a State unemployment compensation law,
with respect to remuneration paid to an employee for
domestic service in a private home of the employer or
for agricultural labor;
(7) remuneration paid in any medium other than cash
to an employee for service not in the course of the
employer's trade or business;
(9) remuneration paid to or on behalf of an employee
if (and to the extent that) at the time of the payment
of such remuneration it is reasonable to believe that a
corresponding deduction is allowable under section 217
(determined without regard to section 274(n));
(10) any payment or series of payments by an employer
to an employee or any of his dependents which is paid--
(A) upon or after the termination of an
employee's employment relationship because of
(i) death, or (ii) retirement for disability,
and
(B) under a plan established by the employer
which makes provision for his employees
generally or a class or classes of his
employees (or for such employees or class or
classes of employees and their dependents),
other than any such payment or series of payments which
would have been paid if the employee's employment
relationship had not been so terminated;
(11) remuneration for agricultural labor paid in any
medium other than cash;
(13) any payment made, or benefit furnished, to or
for the benefit of an employee if at the time of such
payment or such furnishing it is reasonable to believe
that the employee will be able to exclude such payment
or benefit from income under section 127, 129,
134(b)(4), or 134(b)(5);
(14) the value of any meals or lodging furnished by
or on behalf of the employer if at the time of such
furnishing it is reasonable to believe that the
employee will be able to exclude such items from income
under section 119;
(15) any payment made by an employer to a survivor or
the estate of a former employee after the calendar year
in which such employee died;
(16) any benefit provided to or on behalf of an
employee if at the time such benefit is provided it is
reasonable to believe that the employee will be able to
exclude such benefit from income under section 74(c),
108(f)(4), 117, or 132;
(17) any payment made to or for the benefit of an
employee if at the time of such payment it is
reasonable to believe that the employee will be able to
exclude such payment from income under section 106(b);
(18) any payment made to or for the benefit of an
employee if at the time of such payment it is
reasonable to believe that the employee will be able to
exclude such payment from income under section 106(d);
(19) remuneration on account of--
(A) a transfer of a share of stock to any
individual pursuant to an exercise of an
incentive stock option (as defined in section
422(b)) or under an employee stock purchase
plan (as defined in section 423(b)), or
(B) any disposition by the individual of such
stock; or
(20) any benefit or payment which is excludable from
the gross income of the employee under section 139B(b).
Except as otherwise provided in regulations prescribed by the
Secretary, any third party which makes a payment included in
wages solely by reason of the parenthetical matter contained in
subparagraph (A) of paragraph (2) shall be treated for purposes
of this chapter and chapter 22 as the employer with respect to
such wages. Nothing in the regulations prescribed for purposes
of chapter 24 (relating to income tax withholding) which
provides an exclusion from ``wages'' as used in such chapter
shall be construed to require a similar exclusion from
``wages'' in the regulations prescribed for purposes of this
chapter.
(c) Employment.--For purposes of this chapter, the term
``employment'' means any service performed prior to 1955, which
was employment for purposes of subchapter C of chapter 9 of the
Internal Revenue Code of 1939 under the law applicable to the
period in which such service was performed, and (A) any
service, of whatever nature, performed after 1954 by an
employee for the person employing him, irrespective of the
citizenship or residence of either, (i) within the United
States, or (ii) on or in connection with an American vessel or
American aircraft under a contract of service which is entered
into within the United States or during the performance of
which and while the employee is employed on the vessel or
aircraft it touches at a port in the United States, if the
employee is employed on and in connection with such vessel or
aircraft when outside the United States, and (B) any service,
of whatever nature, performed after 1971 outside the United
States (except in a contiguous country with which the United
States has an agreement relating to unemployment compensation)
by a citizen of the United States as an employee of an American
employer (as defined in subsection (j)(3)), except--
(1) agricultural labor (as defined in subsection (k))
unless--
(A) such labor is performed for a person
who--
(i) during any calendar quarter in
the calendar year or the preceding
calendar year paid remuneration in cash
of $20,000 or more to individuals
employed in agricultural labor
(including labor performed by an alien
referred to in subparagraph (B)), or
(ii) on each of some 20 days during
the calendar year or the preceding
calendar year, each day being in a
different calendar week, employed in
agricultural labor (including labor
performed by an alien referred to in
subparagraph (B)) for some portion of
the day (whether or not at the same
moment of time) 10 or more individuals;
and
(B) such labor is not agricultural labor
performed by an individual who is an alien
admitted to the United States to perform
agricultural labor pursuant to sections 214(c)
and 101(a)(15)(H) of the Immigration and
Nationality Act;
(2) domestic service in a private home, local college
club, or local chapter of a college fraternity or
sorority unless performed for a person who paid cash
remuneration of $1,000 or more to individuals employed
in such domestic service in any calendar quarter in the
calendar year or the preceding calendar year;
(3) service not in the course of the employer's trade
or business performed in any calendar quarter by an
employee, unless the cash remuneration paid for such
service is $50 or more and such service is performed by
an individual who is regularly employed by such
employer to perform such service. For purposes of this
paragraph, an individual shall be deemed to be
regularly employed by an employer during a calendar
quarter only if--
(A) on each of some 24 days during such
quarter such individual performs for such
employer for some portion of the day service
not in the course of the employer's trade or
business, or
(B) such individual was regularly employed
(as determined under subparagraph (A)) by such
employer in the performance of such service
during the preceding calendar quarter;
(4) service performed on or in connection with a
vessel or aircraft not an American vessel or American
aircraft, if the employee is employed on and in
connection with such vessel or aircraft when outside
the United States;
(5) service performed by an individual in the employ
of his son, daughter, or spouse, and service performed
by a child under the age of 21 in the employ of his
father or mother;
(6) service performed in the employ of the United
States Government or of an instrumentality of the
United States which is--
(A) wholly or partially owned by the United
States, or
(B) exempt from the tax imposed by section
3301 by virtue of any provision of law which
specifically refers to such section (or the
corresponding section of prior law) in granting
such exemption;
(7) service performed in the employ of a State, or
any political subdivision thereof, or in the employ of
an Indian tribe, or any instrumentality of any one or
more of the foregoing which is wholly owned by one or
more States or political subdivisions or Indian tribes;
and any service performed in the employ of any
instrumentality of one or more States or political
subdivisions to the extent that the instrumentality is,
with respect to such service, immune under the
Constitution of the United States from the tax imposed
by section 3301;
(8) service performed in the employ of a religious,
charitable, educational, or other organization
described in section 501(c)(3) which is exempt from
income tax under section 501(a);
(9) service performed by an individual as an employee
or employee representative as defined in section 1 of
the Railroad Unemployment Insurance Act (45 U.S.C.
351);
(10)(A) service performed in any calendar quarter in
the employ of any organization exempt from income tax
under section 501(a) (other than an organization
described in section 401(a)) or under section 521, if
the remuneration for such service is less than $50, or
(B) service performed in the employ of a school,
college, or university, if such service is performed
(i) by a student who is enrolled and is regularly
attending classes at such school, college, or
university, or (ii) by the spouse of such a student, if
such spouse is advised, at the time such spouse
commences to perform such service, that (I) the
employment of such spouse to perform such service is
provided under a program to provide financial
assistance to such student by such school, college, or
university, and (II) such employment will not be
covered by any program of unemployment insurance, or
(C) service performed by an individual who is
enrolled at a nonprofit or public educational
institution which normally maintains a regular faculty
and curriculum and normally has a regularly organized
body of students in attendance at the place where its
educational activities are carried on as a student in a
full-time program, taken for credit at such
institution, which combines academic instruction with
work experience, if such service is an integral part of
such program, and such institution has so certified to
the employer, except that this subparagraph shall not
apply to service performed in a program established for
or on behalf of an employer or group of employers, or
(D) service performed in the employ of a hospital, if
such service is performed by a patient of such
hospital;
(11) service performed in the employ of a foreign
government (including service as a consular or other
officer or employee or a nondiplomatic representative);
(12) service performed in the employ of an
instrumentality wholly owned by a foreign government--
(A) if the service is of a character similar
to that performed in foreign countries by
employees of the United States Government or of
an instrumentality thereof; and
(B) if the Secretary of State shall certify
to the Secretary of the Treasury that the
foreign government, with respect to whose
instrumentality exemption is claimed, grants an
equivalent exemption with respect to similar
service performed in the foreign country by
employees of the United States Government and
of instrumentalities thereof;
(13) service performed as a student nurse in the
employ of a hospital or a nurses' training school by an
individual who is enrolled and is regularly attending
classes in a nurses' training school chartered or
approved pursuant to State law; and service performed
as an intern in the employ of a hospital by an
individual who has completed a 4 years' course in a
medical school chartered or approved pursuant to State
law;
(14) service performed by an individual for a person
as an insurance agent or as an insurance solicitor, if
all such service performed by such individual for such
person is performed for remuneration solely by way of
commission;
(15)(A) service performed by an individual under the
age of 18 in the delivery or distribution of newspapers
or shopping news, not including delivery or
distribution to any point for subsequent delivery or
distribution;
(B) service performed by an individual in, and at the
time of, the sale of newspapers or magazines to
ultimate consumers, under an arrangement under which
the newspapers or magazines are to be sold by him at a
fixed price, his compensation being based on the
retention of the excess of such price over the amount
at which the newspapers or magazines are charged to
him, whether or not he is guaranteed a minimum amount
of compensation for such service, or is entitled to be
credited with the unsold newspapers or magazines turned
back;
(16) service performed in the employ of an
international organization;
(17) service performed by an individual in (or as an
officer or member of the crew of a vessel while it is
engaged in) the catching, taking, harvesting,
cultivating, or farming of any kind of fish, shellfish,
crustacea, sponges, seaweeds, or other aquatic forms of
animal and vegetable life (including service performed
by any such individual as an ordinary incident to any
such activity), except--
(A) service performed in connection with the
catching or taking of salmon or halibut, for
commercial purposes, and
(B) service performed on or in connection
with a vessel of more than 10 net tons
(determined in the manner provided for
determining the register tonnage of merchant
vessels under the laws of the United States);
(18) service described in section 3121(b)(20);
(19) service which is performed by a nonresident
alien individual for the period he is temporarily
present in the United States as a nonimmigrant under
subparagraph (F), (J), (M), or (Q) of section
101(a)(15) of the Immigration and Nationality Act, as
amended (8 U.S.C. 1101(a)(15)(F), (J), (M), or (Q)),
and which is performed to carry out the purpose
specified in subparagraph (F), (J), (M), or (Q), as the
case may be;
(20) service performed by a full time student (as
defined in subsection (q)) in the employ of an
organized camp--
(A) if such camp--
(i) did not operate for more than 7
months in the calendar year and did not
operate for more than 7 months in the
preceding calendar year, or
(ii) had average gross receipts for
any 6 months in the preceding calendar
year which were not more than 331/3
percent of its average gross receipts
for the other 6 months in the preceding
calendar year; and
(B) if such full time student performed
services in the employ of such camp for less
than 13 calendar weeks in such calendar year;
or
(21) service performed by a person committed to a
penal institution.
(d) Included and excluded service.--For purposes of this
chapter, if the services performed during one-half or more of
any pay period by an employee for the person employing him
constitute employment, all the services of such employee for
such period shall be deemed to be employment; but if the
services performed during more than one-half of any such pay
period by an employee for the person employing him do not
constitute employment, then none of the services of such
employee for such period shall be deemed to be employment. As
used in this subsection, the term ``pay period'' means a period
(of not more than 31 consecutive days) for which a payment of
remuneration is ordinarily made to the employee by the person
employing him. This subsection shall not be applicable with
respect to services performed in a pay period by an employee
for the person employing him, where any of such service is
excepted by subsection (c)(9).
(e) State agency.--For purposes of this chapter, the term
``State agency'' means any State officer, board, or other
authority, designated under a State law to administer the
unemployment fund in such State.
(f) Unemployment fund.--For purposes of this chapter, the
term ``unemployment fund'' means a special fund, established
under a State law and administered by a State agency, for the
payment of compensation. Any sums standing to the account of
the State agency in the Unemployment Trust Fund established by
section 904 of the Social Security Act, as amended (42 U.S.C.
1104), shall be deemed to be a part of the unemployment fund of
the State, and no sums paid out of the Unemployment Trust Fund
to such State agency shall cease to be a part of the
unemployment fund of the State until expended by such State
agency. An unemployment fund shall be deemed to be maintained
during a taxable year only if throughout such year, or such
portion of the year as the unemployment fund was in existence,
no part of the moneys of such fund was expended for any purpose
other than the payment of compensation (exclusive of expenses
of administration) and for refunds of sums erroneously paid
into such fund and refunds paid in accordance with the
provisions of section 3305(b); except that--
(1) an amount equal to the amount of employee
payments into the unemployment fund of a State may be
used in the payment of cash benefits to individuals
with respect to their disability, exclusive of expenses
of administration;
(2) the amounts specified by section 903(c)(2) or
903(d)(4) of the Social Security Act may, subject to
the conditions prescribed in such section, be used for
expenses incurred by the State for administration of
its unemployment compensation law and public employment
offices,1
(3) nothing in this subsection shall be
construed to prohibit deducting any amount from
unemployment compensation otherwise payable to an
individual and using the amount so deducted to pay for
health insurance, or the withholding of Federal, State,
or local individual income tax, if the individual
elected to have such deduction made and such deduction
was made under a program approved by the Secretary of
Labor;
(4) amounts may be deducted from unemployment
benefits and used to repay overpayments as provided in
section 303(g) of the Social Security Act;
(5) amounts may be withdrawn for the payment of
short-time compensation under a short-time compensation
program (as defined in subsection (v)); and
(6) amounts may be withdrawn for the payment of
allowances under a self-employment assistance program
(as defined in subsection (t)).
(g) Contributions.--For purposes of this chapter, the term
``contributions'' means payments required by a State law to be
made into an unemployment fund by any person on account of
having individuals in his employ, to the extent that such
payments are made by him without being deducted or deductible
from the remuneration of individuals in his employ.
(h) Compensation.--For purposes of this chapter, the term
``compensation'' means cash benefits payable to individuals
with respect to their unemployment.
(i) Employee.--For purposes of this chapter, the term
``employee'' has the meaning assigned to such term by section
3121(d), except that paragraph (4) and subparagraphs (B) and
(C) of paragraph (3) shall not apply.
(j) State, United States, and American employer.--For
purposes of this chapter--
(1) State.--The term ``State'' includes the District
of Columbia, the Commonwealth of Puerto Rico, and the
Virgin Islands.
(2) United States.--The term ``United States'' when
used in a geographical sense includes the States, the
District of Columbia, the Commonwealth of Puerto Rico,
and the Virgin Islands.
(3) American employer.--The term ``American
employer'' means a person who is--
(A) an individual who is a resident of the
United States,
(B) a partnership, if two-thirds or more of
the partners are residents of the United
States,
(C) a trust, if all of the trustees are
residents of the United States, or
(D) a corporation organized under the laws of
the United States or of any State.
An individual who is a citizen of the Commonwealth of Puerto
Rico or the Virgin Islands (but not otherwise a citizen of the
United States) shall be considered, for purposes of this
section, as a citizen of the United States.
(k) Agricultural labor.--For purposes of this chapter, the
term ``agricultural labor'' has the meaning assigned to such
term by subsection (g) of section 3121, except that for
purposes of this chapter subparagraph (B) of paragraph (4) of
such subsection (g) shall be treated as reading:

``(B) in the employ of a group of operators
of farms (or a cooperative organization of
which such operators are members) in the
performance of service described in
subparagraph (A), but only if such operators
produced more than one-half of the commodity
with respect to which such service is
performed;''.
(m) American vessel and aircraft.--For purposes of this
chapter, the term ``American vessel'' means any vessel
documented or numbered under the laws of the United States; and
includes any vessel which is neither documented or numbered
under the laws of the United States nor documented under the
laws of any foreign country, if its crew is employed solely by
one or more citizens or residents of the United States or
corporations organized under the laws of the United States or
of any State; and the term ``American aircraft'' means an
aircraft registered under the laws of the United States.
(n) Vessels operated by general agents of United States.--
Notwithstanding the provisions of subsection (c)(6), service
performed by officers and members of the crew of a vessel which
would otherwise be included as employment under subsection (c)
shall not be excluded by reason of the fact that it is
performed on or in connection with an American vessel--
(1) owned by or bareboat chartered to the United
States and
(2) whose business is conducted by a general agent of
the Secretary of Transportation.
For purposes of this chapter, each such general agent shall be
considered a legal entity in his capacity as such general
agent, separate and distinct from his identity as a person
employing individuals on his own account, and the officers and
members of the crew of such an American vessel whose business
is conducted by a general agent of the Secretary of
Transportation shall be deemed to be performing services for
such general agent rather than the United States. Each such
general agent who in his capacity as such is an employer within
the meaning of subsection (a) shall be subject to all the
requirements imposed upon an employer under this chapter with
respect to service which constitutes employment by reason of
this subsection.
(o) Special rule in case of certain agricultural workers.--
(1) Crew leaders who are registered or provide
specialized agricultural labor.--For purposes of this
chapter, any individual who is a member of a crew
furnished by a crew leader to perform agricultural
labor for any other person shall be treated as an
employee of such crew leader--
(A) if--
(i) such crew leader holds a valid
certificate of registration under the
Migrant and Seasonal Agricultural
Worker Protection Act; or
(ii) substantially all the members
of such crew operate or maintain
tractors, mechanized harvesting or
crop-dusting equipment, or any other
mechanized equipment, which is provided
by such crew leader; and
(B) if such individual is not an employee of
such other person within the meaning of
subsection (i).
(2) Other crew leaders.--For purposes of this
chapter, in the case of any individual who is furnished
by a crew leader to perform agricultural labor for any
other person and who is not treated as an employee of
such crew leader under paragraph (1)--
(A) such other person and not the crew leader
shall be treated as the employer of such
individual; and
(B) such other person shall be treated as
having paid cash remuneration to such
individual in an amount equal to the amount of
cash remuneration paid to such individual by
the crew leader (either on his behalf or on
behalf of such other person) for the
agricultural labor performed for such other
person.
(3) Crew leader.--For purposes of this subsection,
the term ``crew leader'' means an individual who--
(A) furnishes individuals to perform
agricultural labor for any other person,
(B) pays (either on his behalf or on behalf
of such other person) the individuals so
furnished by him for the agricultural labor
performed by them, and
(C) has not entered into a written agreement
with such other person under which such
individual is designated as an employee of such
other person.
(p) Concurrent employment by two or more employers.--For
purposes of sections 3301, 3302, and 3306(b)(1), if two or more
related corporations concurrently employ the same individual
and compensate such individual through a common paymaster which
is one of such corporations, each such corporation shall be
considered to have paid as remuneration to such individual only
the amounts actually disbursed by it to such individual and
shall not be considered to have paid as remuneration to such
individual amounts actually disbursed to such individual by
another of such corporations.
(q) Full time student.--For purposes of subsection (c)(20),
an individual shall be treated as a full time student for any
period--
(1) during which the individual is enrolled as a full
time student at an educational institution, or
(2) which is between academic years or terms if--
(A) the individual was enrolled as a full
time student at an educational institution for
the immediately preceding academic year or
term, and
(B) there is a reasonable assurance that the
individual will be so enrolled for the
immediately succeeding academic year or term
after the period described in subparagraph (A).
(r) Treatment of certain deferred compensation and salary
reduction arrangements.--
(1) Certain employer contributions treated as
wages.--Nothing in any paragraph of subsection (b)
(other than paragraph (1)) shall exclude from the term
``wages''--
(A) any employer contribution under a
qualified cash or deferred arrangement (as
defined in section 401(k)) to the extent not
included in gross income by reason of section
402(e)(3), or
(B) any amount treated as an employer
contribution under section 414(h)(2) where the
pickup referred to in such section is pursuant
to a salary reduction agreement (whether
evidenced by a written instrument or
otherwise).
(2) Treatment of certain nonqualified deferred
compensation plans.--
(A) In general.--Any amount deferred under a
nonqualified deferred compensation plan shall
be taken into account for purposes of this
chapter as of the later of--
(i) when the services are
performed, or
(ii) when there is no substantial
risk of forfeiture of the rights to
such amount.
(B) Taxed only once.--Any amount taken into
account as wages by reason of subparagraph (A)
(and the income attributable thereto) shall not
thereafter be treated as wages for purposes of
this chapter.
(C) Nonqualified deferred compensation
plan.--For purposes of this paragraph, the term
``nonqualified deferred compensation plan''
means any plan or other arrangement for
deferral of compensation other than a plan
described in subsection (b)(5).
(s) Tips treated as wages.--For purposes of this chapter, the
term ``wages'' includes tips which are--
(1) received while performing services which
constitute employment, and
(2) included in a written statement furnished to the
employer pursuant to section 6053(a).
(t) Self-employment assistance program.--For the purposes of
this chapter, the term ``self-employment assistance program''
means a program under which--
(1) individuals who meet the requirements described
in paragraph (3) are eligible to receive an allowance
in lieu of regular unemployment compensation under the
State law for the purpose of assisting such individuals
in establishing a business and becoming self-employed;
(2) the allowance payable to individuals pursuant to
paragraph (1) is payable in the same amount, at the
same interval, on the same terms, and subject to the
same conditions, as regular unemployment compensation
under the State law, except that--
(A) State requirements relating to
availability for work, active search for work,
and refusal to accept work are not applicable
to such individuals;
(B) State requirements relating to
disqualifying income are not applicable to
income earned from self-employment by such
individuals; and
(C) such individuals are considered to be
unemployed for the purposes of Federal and
State laws applicable to unemployment
compensation,
as long as such individuals meet the requirements
applicable under this subsection;
(3) individuals may receive the allowance described
in paragraph (1) if such individuals--
(A) are eligible to receive regular
unemployment compensation under the State law,
or would be eligible to receive such
compensation except for the requirements
described in subparagraph (A) or (B) of
paragraph (2);
[(B) are identified pursuant to a State
worker profiling system as individuals likely
to exhaust regular unemployment compensation;
and
[(C) are participating in self-employment
assistance activities which--
[(i) include entrepreneurial
training, business counseling, and
technical assistance; and
[(ii) are approved by the State
agency; and]
(B) are participating in self-employment
assistance activities which are approved by the
State agency and either--
(i) include entrepreneurial
training, business counseling, and
technical assistance; or
(ii) are performed pursuant to a
business plan and market feasibility
study submitted by the individual and
approved by the State or an agency
designated by the State; and
[(D)] (C) are actively engaged on a full-time
basis in activities (which may include
training) relating to the establishment of a
business and becoming self-employed and are
certifying such activities on at least a weekly
basis to an agency designated by the State;
(4) the aggregate number of individuals receiving the
allowance under the program does not at any time exceed
[5] 10 percent of the number of individuals receiving
regular unemployment compensation under the State law
at such time;
(5) the program does not result in any cost to the
Unemployment Trust Fund (established by section 904(a)
of the Social Security Act) in excess of the cost that
would be incurred by such State and charged to such
Fund if the State had not participated in such program;
and
(6) the program meets such other requirements as the
Secretary of Labor determines to be appropriate.
(u) Indian tribe.--For purposes of this chapter, the term
``Indian tribe'' has the meaning given to such term by section
4(e) of the Indian Self-Determination and Education Assistance
Act (25 U.S.C. 5304(e)), and includes any subdivision,
subsidiary, or business enterprise wholly owned by such an
Indian tribe.
(v) Short-time compensation program.--For purposes of this
section, the term ``short-time compensation program'' means a
program under which--
(1) the participation of an employer is voluntary;
(2) an employer reduces the number of hours worked by
employees in lieu of layoffs;
(3) such employees whose workweeks have been reduced
by at least 10 percent, and by not more than the
percentage, if any, that is determined by the State to
be appropriate (but in no case more than 60 percent),
are not disqualified from unemployment compensation;
(4) the amount of unemployment compensation payable
to any such employee is a pro rata portion of the
unemployment compensation which would otherwise be
payable to the employee if such employee were
unemployed;
(5) such employees meet the availability for work and
work search test requirements while collecting short-
time compensation benefits, by being available for
their workweek as required by the State agency;
(6) eligible employees may participate, as
appropriate, in training (including employer-sponsored
training or worker training funded under the Workforce
Innovation and Opportunity Act) to enhance job skills
if such program has been approved by the State agency;
(7) the State agency shall require employers to
certify that if the employer provides health benefits
and retirement benefits under a defined benefit plan
(as defined in section 414(j)) or contributions under a
defined contribution plan (as defined in section
414(i)) to any employee whose workweek is reduced under
the program that such benefits will continue to be
provided to employees participating in the short-time
compensation program under the same terms and
conditions as though the workweek of such employee had
not been reduced or to the same extent as other
employees not participating in the short-time
compensation program;
(8) the State agency shall require an employer to
submit a written plan describing the manner in which
the requirements of this subsection will be implemented
(including a plan for giving advance notice, where
feasible, to an employee whose workweek is to be
reduced) together with an estimate of the number of
layoffs that would have occurred absent the ability to
participate in short-time compensation and such other
information as the Secretary of Labor determines is
appropriate;
(9) the terms of the employer's written plan and
implementation shall be consistent with employer
obligations under applicable Federal and State laws;
and
(10) upon request by the State and approval by the
Secretary of Labor, only such other provisions are
included in the State law that are determined to be
appropriate for purposes of a short-time compensation
program.

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NEW OPPORTUNITIES FOR BUSINESS OWNERSHIP AND SELF-SUFFICIENCY ACT

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