2263 112th CONGRESS
H. R. 2263
To amend the Internal Revenue Code of 1986 to
exclude from Federal tax certain payments made in connection with reductions in
force.IN THE HOUSE OF REPRESENTATIVES
Mr. PAUL introduced the following bill; which was referred
to the Committee on Ways and Means
amend the Internal Revenue Code of 1986 to exclude from Federal tax certain payments
made in connection with reductions in force.
enacted by the Senate and House of Representatives of the United States of America
in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Unemployed Tax Relief Act of 2011'.
2. EXCLUSION FROM INCOME FOR PAYMENTS IN CONNECTION WITH REDUCTIONS IN FORCE.
(a) In General- Part III of subchapter B of chapter 1 of the Internal Revenue
Code of 1986 is amended by inserting after section 139D the following new section:
139E. PAYMENTS IN CONNECTION WITH REDUCTIONS IN FORCE.
General- In the case of an individual who is separated from employment as a result
of a reduction in force of the employer, gross income shall not include--
`(1) the last regular payment of wages (as defined in section 3121) or compensation
(as defined in section 3231), as the case may be, for service performed before
such separation, and
`(2) any severance amount received
in connection with such separation.
`(b) Employment Taxes-
Amounts excluded from gross income under subsection (a) shall not be taken into
account as wages for purposes of subtitle C.
`(c) Severance Amount-
For purposes of this section, a severance amount includes--
`(1) any amount based on months of service which is not in the nature of retirement,
`(2) any amount in lieu of unused vacation time or sick leave,
`(3) any amount in lieu of a required notice period, and
`(4) any stock option offered as part of a severance package.'.
(b) Trust Funds Held Harmless- There is hereby appropriated (out of any money
in the Treasury not otherwise appropriated) for each fiscal year to each employment-related
fund an amount equal to the reduction in the transfers to such fund for such fiscal
year by reason of the amendment made by subsection (a). For purposes of the preceding
sentence, the term `employment-related fund' means a fund the contributions to
which are determined in relation to taxes imposed under subtitle C of the Internal
Revenue Code of 1986.
(c) Clerical Amendment- The table of sections
for part III of subchapter B of chapter 1 of such Code is amended by inserting
after the item relating to section 139D the following new item:
139E. Payments in connection with reductions in force.'.
(d) Effective Date- The amendment made by this section shall apply to amounts
received after December 31, 2009.