DIRECTIVE	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 24-89
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	DONALD J. KULICK Administrator for Regional Management
SUBJECT	:	The Technical and Miscellaneous Revenue Act of 1988 (Public Law 100-647) -- Provisions Affecting the Federal-State Unemployment Compensation Program.

1. Purpose. To advise State agencies of the provisions of the Technical and Miscellaneous Revenue Act of 1988, P.L. 100-647, which affect the Federal-State Unemployment Compensation Program.

2. References. Sections 1001, 1011B, 3041, 3042, 4001, 4002, 6305, and 8301 of P.L. 100-647.

3. Background. On November 10, 1988, the President signed into law the Technical and Miscellaneous Revenue Act of 1988, P.L. 100-647, which contains several provisions affecting the unemployment compensation (UC) program.  Although none of these provisions will require changes in State UC laws for purposes of conformity with Federal law, several of these provisions affect the administration of existing provisions of State law; other provisions may be enacted at State option. Following is a summary of the changes made.

   Section 1001(d)(2)(C) amends Section 3306(c)(19), Federal Unemployment Tax Act (FUTA), to exclude from employment services performed by a nonresident alien individual for the period the individual is temporarily present in the United States as a nonimmigrant under section 101(a)(15)(M) of the Immigration and Nationality Act (INA) and which are performed to carry out the purpose specified in Section 101(a)(15)(M), NA.

   Section 1001(g)(4)(B) amends section 3306(b)(9), FUTA, to provide that the exclusion from wages of certain moving expenses which are deductible for the purposes of income taxes under Section 217 of the Internal Revenue Code of 1986 (IRC) will not be subject to the deduction limitation of Section 274(n), IRC.

   Section 1011B(a)(22)(C) adds a new subsection (t) to Section 3306, which expands the definition of wages to include amounts includable in gross income by reason of Section 89, IRC.

   Section 1011B(a)(23)(A) amends Section 3306(b)(5)(G), FUTA, to provide that the exclusion from wages, made through payments or benefits under a cafeteria plan applies only if --

   (1)  such payments would not be treated as wages without regard to such plan, and

   (2)  it is reasonable to believe that (if Section 125 applied for the purposes of this section) Section 125, would not treat any wages as constructively received.

   Sections 3041 and 3042 amend the IRC to provide, in part, that no Federal or State tax, including income, social security and unemployment compensation taxes, shall be imposed on income from or remuneration paid for services performed in a fishing rights-related activity of an Indian tribe by a member of such tribe or by a qualified Indian entity.  These sections did not amend FUTA.

   Sections 4001 and 4002 amend the IRC to restore, in part, exclusions from an employee's gross income for amounts paid by an employer for certain educational assistance and amounts contributed by an employer to a qualified group legal services plan for an employee.  Such amounts excluded from an employee's gross income are excluded from the definition of "wages" under Sections 3306(b)(12) and 3306(b)(13), FUTA.

   Section 6305 permits most States to treat a person who renders dependent care or similar services as other than an employee for employment tax purposes if certain conditions are satisfied.

   Section 8301 extends the dates when two reports to the Congress are due on the self-employment demonstration projects are authorized by the Omnibus Budget Reconciliation Act of 1987, P.L. 100-203.

4. Action Required. SESAs are requested to notify appropriate staff to these provisions.

5. Inquiries. Inquiries should be directed to your Regional Office.

6. Attachment. Text, explanation and interpretation of changes to Federal-State Unemployment Compensation (UC) program.