Julie M. Whittaker
Specialist in Income Security
During some recessions, current taxes and reserve balances were insufficient to cover state expenditures for unemployment compensation (UC) benefits. UC benefits are an entitlement, and states are legally required to pay benefits even if the state account is insolvent. Some states may borrow funds from the Federal Unemployment Account (FUA) within the Unemployment Trust Fund (UTF) to meet UC benefit obligations. The 2009 stimulus package (the American Recovery and Reinvestment Act of 2009, P.L. 111-5 § 2004) temporarily waives interest payments and the accrual of interest on these loans to states from the FUA.
This report summarizes how insolvent states may borrow funds from the federal account within the UTF to meet their UC benefit obligations. Outstanding loans listed by state may be found at the Department of Labor’s website: http://www.workforcesecurity.doleta.gov/unemploy/ budget.asp#tfloans.
In 2010, three states had a credit reduction: Michigan (0.6), Indiana (0.3), and South Carolina (0.3). As a result, the credit reduction was applied retroactively to tax year 2010 earnings, and the net FUTA tax during 2010 for Michigan employers is 1.4% on the first $7,000 of each employee’s earnings. In Indiana and South Carolina (with a credit reduction of 0.3) the net FUTA tax during 2010 for Indiana and South Carolina employers was 1.1% on the first $7,000 of each employee’s earnings. In all other states the net FUTA 2010 tax was 0.8%.
Date of Report: February 8, 2011
Number of Pages: 13
Order Number: RS22954
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Katelin P. Isaacs
Analyst in Income Security
Julie M. Whittaker
Specialist in Income Security
In July 2008, a new temporary unemployment benefit, the Emergency Unemployment Compensation (EUC08) program, began. The program’s authorization ends on January 3, 2012. EUC08 was created by P.L. 110-252, and it has been amended by P.L. 110-449, P.L. 111-5, P.L. 111-92, P.L. 111-118, P.L. 111-144, P.L. 111-157, P.L. 111-205, and P.L. 111-312. Most recently, P.L. 111-312 extends the authorization of the EUC08 program, but does not change the structure of the program or augment benefits. This temporary unemployment insurance program provides up to 20 additional weeks of unemployment benefits to certain workers who have exhausted their rights to regular unemployment compensation (UC) benefits. A second tier of benefits provides up to an additional 14 weeks of benefits (for a total of up to 34 weeks of EUC08 benefits for all unemployed workers). A third tier is available in states with a total unemployment rate of at least 6% and provides up to an additional 13 weeks of EUC08 benefits (for a total of up to 47 weeks of EUC08 benefits in certain states). A fourth tier is available in states with a total unemployment rate of at least 8.5% and provides up to an additional six weeks of EUC08 benefits (for a total of up to 53 weeks of EUC08 benefits in certain states).
All tiers of EUC08 benefits are temporary and expire the week ending on or before January 3, 2012. Those beneficiaries receiving tier I, II, III, or IV of EUC08 benefits before December 31, 2011 (January 1, 2012, in New York) are “grandfathered” for their remaining weeks of eligibility for that particular tier only. There will be no new entrants into any tier of the EUC08 program after December 31, 2011. If an individual is eligible to continue to receive his or her remaining EUC08 benefit tier after December 31, 2011, that individual would not be entitled to tier II benefits once those tier I benefits were exhausted. No EUC08 benefits—regardless of tier—are payable for any week after June 9, 2012.
On December 17, 2010, the President signed P.L. 111-312, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. P.L. 111-312 extends the authorization for the EUC08 program until January 3, 2012, and the 100% federal financing of Extended Benefit (EB) program through January 4, 2012.
Date of Report: February 11, 2011
Number of Pages: 20
Order Number: RS22915
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Erika K. Lunder
Legislative Attorney
L. Paige Whitaker
Legislative Attorney
In the 2010 midterm election cycle, tax-exempt § 501(c)(4) social welfare organizations reportedly spent millions of dollars in an attempt to influence the elections. These organizations are permitted to engage in campaign activity under federal law, subject to regulation under both the Internal Revenue Code (IRC) and the Federal Election Campaign Act (FECA).
Many had predicted that § 501(c)(4) groups would play an active role in the election cycle in light of the Supreme Court’s decision in Citizens United v. FEC. In that case, the Court invalidated long-standing prohibitions in FECA on corporations and labor unions using their general treasury funds to make independent expenditures and electioneering communications. Since many § 501(c)(4) organizations are incorporated, they had been subject to these prohibitions unless qualifying for an exception. In addition, prior to Citizens United, no § 501(c)(4) organizations— regardless of corporate status—could serve as conduits for corporate or labor union treasury funds to pay for independent expenditures and electioneering communications.
While § 501(c)(4) organizations are operating with less restriction under FECA after Citizens United, it is important to realize that § 501(c)(4) organizations are still subject to regulation under FECA and the IRC. For example, under FECA, incorporated § 501(c)(4) organizations are prohibited from making political contributions and would still be required to establish a political action committee (PAC) in order to do so. One requirement under the IRC is that the organization must have the promotion of social welfare as its primary activity. Thus, a group that wants to maintain its § 501(c)(4) status cannot have campaign activity (along with any other activity that does not serve its exempt purpose) as its primary activity. Furthermore, § 501(c)(4) organizations engaging in campaign-related activities may be required to report information to the Federal Election Commission (FEC) and the Internal Revenue Service (IRS).
In the 111th Congress, numerous bills were introduced responding to the Citizens United decision. Many would have affected § 501(c)(4) organizations. For example, the primary legislative response to Citizens United, the DISCLOSE Act (H.R. 5175, as passed by the House, and S. 3628) would have generally subjected § 501(c)(4) organizations to the act’s disclosure and disclaimer provisions, although there would have been an exception for qualifying large groups. No similar legislation has yet been introduced in the 112th Congress.
Date of Report: January 27, 2011
Number of Pages: 13
Order Number: R40183
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Erika K. Lunder
Legislative Attorney
L. Paige Whitaker
Legislative Attorney
During the recent election season, the political activities of § 501(c)(3) organizations were in the news, with allegations made that some groups engaged in impermissible activities. These groups are absolutely prohibited from participating in campaign activity under the Internal Revenue Code (IRC). On the other hand, they are permitted to engage in nonpartisan political activities (e.g., distributing voter guides and conducting get-out-the-vote drives) that do not support or oppose a candidate. Determining whether an activity violates the IRC prohibition depends on the facts and circumstances of each case, and the line between impermissible and permissible activities can sometimes be difficult to discern.
Due to the IRC prohibition, § 501(c)(3) organizations generally are not permitted to engage in the types of activities regulated by the Federal Election Campaign Act (FECA). However, the activities regulated under the IRC and FECA are not necessarily identical. An organization must comply with any applicable FECA provisions if engaging in activities regulated by FECA (e.g., making an issue advocacy communication under the IRC that constitutes an electioneering communication under FECA).
A 2010 Supreme Court case, Citizens United v. FEC, has received considerable attention for invalidating several long-standing prohibitions in FECA on corporate and labor union campaign treasury spending. This case does not appear to significantly impact the political activities of § 501(c)(3) organizations because they remain subject to the prohibition on such activity under the IRC. Similarly, while numerous bills were introduced in the 111th Congress in response to Citizens United, it appears most would have only minimally impacted the activities of § 501(c)(3) organizations since they are already generally prohibited from engaging in the activities regulated under the bills. The primary legislative response in the 111th Congress to Citizens United, the DISCLOSE ACT (H.R. 5175, as passed by the House, and S. 3628) would have expressly exempted § 501(c)(3) organizations from the legislation’s disclosure and disclaimer provisions.
This report examines the restrictions imposed on campaign activity by § 501(c)(3) organizations under the tax and campaign finance laws. For a discussion limited to the ability of churches and other houses of worship to engage in campaign activity, see CRS Report RL34447, Churches and Campaign Activity: Analysis Under Tax and Campaign Finance Laws, by Erika K. Lunder and L. Paige Whitaker.
Date of Report: January 27, 2011
Number of Pages: 12
Order Number: R40141
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
John R. Luckey
Legislative Attorney
This report contains an explanation of the major provisions of the federal estate, gift, and generation-skipping transfer taxes as they apply to transfers in 2011. The discussion provides basic principles to be applied in the computation of these three transfer taxes.
The federal estate and generation-skipping taxes were resurrected by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) after a hiatus of one year (2010). This act also provided elective options for estates of those who died in 2010.
The federal estate tax is computed through a series of adjustments and modifications of a tax base known as the “gross estate.” Certain allowable deductions reduce the gross estate to the “taxable estate,” to which is then added the total of all lifetime taxable gifts made by the decedent. The tax rates are applied and, after reduction for certain allowable credits, the amount of tax owed by the estate is reached. The top rate for 2011 is 35% and the exclusion amount is $5,000,000.
This discussion divides the federal gift tax into two components: the taxable gift and the gift tax computation. The federal gift tax is imposed on lifetime gifts of property. The tax depends in large part upon the fundamental element—the value of the “taxable gift.” The taxable gift is determined by reducing the gross value of the gift by the available deductions and exclusions. The gift tax liability determined on the basis of the donor’s taxable gifts may be reduced by the unified lifetime credit (which covers the excludible amount of $5,000,000). The annual per donee exclusion is $13,000 ($26,000 for joint gifts) for 2011. The top rate for 2011 is 35%.
The purpose of the generation-skipping transfer tax is to close a perceived loophole in the estate and gift tax system where property could be transferred to successive generations without intervening estate or gift tax consequences. There are two basic forms of generation-skipping transfers; the indirect skip, where the generation one level below the decedent receives some beneficial interest in the property before the property passes to the generation two or more levels below, and the direct skip, where the property passes directly to the generation two or more levels below the decedent. This discussion describes the tax on these types of transfers, its computation and implementation, and use of such concepts as generation assignment and inclusion ratios. The flat rate for this tax in 2011 is 35%.
Date of Report: January 19, 2011
Number of Pages: 14
Order Number: 95-416
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Posts
