THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE RESOLUTION

INTRODUCED BY TRUITT, BOYD, CLYMER, CUTLER, MILLER, SCHRODER AND VULAKOVICH, APRIL 20, 2011

REFERRED TO COMMITTEE ON FINANCE, APRIL 20, 2011  

A CONCURRENT RESOLUTION

Urging the Congress of the United States to reexamine the

Federal Unemployment Tax Act as it relates to corporate

officers.

WHEREAS, The Federal Unemployment Tax Act (FUTA) (Public Law

99-514, 26 U.S.C. Ch. 23) requires that every employer pay an

excise tax of 6.2% on the first $7,000 of total wages paid to

each employee; and

WHEREAS, FUTA includes corporate officers within the scope of

covered employment by defining these persons as an "employee" of

a corporation in section 3121(d)(1) of the Internal Revenue Code

of 1986 (Public Law 99-514, 26 U.S.C. § 3121(d)(1)); and

WHEREAS, Pennsylvania employers, including corporate

officers, can, to the extent provided by law, take a tax credit

against the FUTA tax of the unemployment contributions which

were paid into the Unemployment Compensation Fund; and

WHEREAS, FUTA establishes that employers may take a maximum

credit of 5.4% against the FUTA tax; and

WHEREAS, After the offset credit is applied, Pennsylvania

employers that pay into the Unemployment Compensation Fund are

left to pay 0.8% FUTA tax on the first $7,000 in wages paid to

each employee; and

WHEREAS, The act of December 5, 1936 (2nd Sp.Sess., 1937

P.L.2897, No.1), known as the Unemployment Compensation Law,

requires that corporate officers pay unemployment compensation

taxes, although they generally are not eligible to collect

unemployment compensation benefits should they become

unemployed; and

WHEREAS, Pennsylvania corporate officers have expressed

frustration because they are required to pay into the

Unemployment Compensation Fund but are subsequently denied

unemployment benefits when they become unemployed; and

WHEREAS, The payment of unemployment compensation taxes is

especially burdensome for small, incorporated businesses; and

WHEREAS, Exempting Pennsylvania corporate officers from State

unemployment contribution liability would be futile because such

officers would then be required to pay the full 6.2% FUTA tax on

their wages instead of the net 0.8% rate normally paid with the

5.4% offset credit permitted for State unemployment taxes paid;

and

WHEREAS, Such an exemption would not provide any real tax

relief to corporate officers, but would merely result in the

Federal Government benefiting from additional tax revenue at the

expense of the Unemployment Compensation Fund; therefore be it

RESOLVED (the Senate concurring), That the General Assembly

of the Commonwealth of Pennsylvania urge the Congress of the

United States to reexamine the Federal Unemployment Tax Act

(Public Law 99-514, 26 U.S.C. Ch. 23) as it relates to corporate

officers and reevaluate the need for such a tax; and be it

further

RESOLVED, That copies of this resolution be transmitted to

the presiding officers of each house of Congress and to each

member of Congress from Pennsylvania.