PRINTER'S NO. 715
No. 53 Session of 2001
INTRODUCED BY WILT, ARMSTRONG, BASTIAN, BELFANTI, BUNT,
CAPPELLI, CLARK, CLYMER, FAIRCHILD, FLICK, HENNESSEY, HORSEY,
LEH, MAITLAND, METCALFE, NICKOL, ORIE, PIPPY, READSHAW,
ROBERTS, ROHRER, SHANER, B. SMITH, SOLOBAY, STEELMAN,
T. STEVENSON, TIGUE, TRELLO, WANSACZ AND WOJNAROSKI,
FEBRUARY 13, 2001
REFERRED TO COMMITTEE ON INTERGOVERNMENTAL AFFAIRS,
FEBRUARY 13, 2001
A CONCURRENT RESOLUTION
1 Urging the Congress of the United States to reexamine the
2 Federal Unemployment Tax Act as it relates to corporate
3 officers.
4 WHEREAS, The Federal Unemployment Tax Act (FUTA) requires
5 that every employer pay an excise tax of 6.2% on the first
6 $7,000 of total wages paid to each employee; and
7 WHEREAS, FUTA includes corporate officers within the scope of
8 covered employment by defining these persons as "employees" of a
9 corporation (26 U.S.C. § 3121(d)(1)); and
10 WHEREAS, Pennsylvania employers, including corporate
11 officers, can, to the extent provided by law, take a tax credit
12 against the FUTA tax of the unemployment contributions that were
13 paid into Pennsylvania's unemployment compensation fund; and
14 WHEREAS, FUTA establishes that employers may take a maximum
15 credit of 5.4% against the FUTA tax; and
16 WHEREAS, After the offset credit is applied, Pennsylvania
1 employers who pay into the State unemployment system are left to
2 pay 0.8% FUTA tax on the first $7,000 in wages paid to each
3 employee; and
4 WHEREAS, Pennsylvania's Unemployment Compensation Law
5 requires that corporate officers pay unemployment compensation
6 taxes, although they generally are not eligible to collect
7 unemployment compensation benefits should they become
8 unemployed; and
9 WHEREAS, Pennsylvania corporate officers have expressed
10 frustration because they are required to pay into the State's
11 unemployment compensation system but are subsequently denied
12 unemployment benefits when they become unemployed; and
13 WHEREAS, The payment of unemployment compensation taxes is
14 especially burdensome for small, incorporated businesses; and
15 WHEREAS, Exempting Pennsylvania corporate officers from State
16 unemployment contribution liability would be futile because such
17 officers would then be required to pay the full 6.2% FUTA tax on
18 their wages instead of the net 0.8% rate normally paid with the
19 5.4% offset credit permitted for State unemployment taxes paid;
20 and
21 WHEREAS, Such an exemption would not provide any real tax
22 relief to corporate officers, but would merely result in the
23 Federal Government benefiting from additional tax revenue at the
24 expense of Pennsylvania's unemployment compensation fund;
25 therefore be it
26 RESOLVED (the Senate concurring), That the General Assembly
27 of the Commonwealth of Pennsylvania urge the Congress to
28 reexamine the FUTA tax as it relates to corporate officers and
29 reevaluate the need for such a tax; and be it further
30 RESOLVED, That copies of this resolution be transmitted to
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1 the presiding officers of each house of Congress and to each
2 member of Congress from Pennsylvania.
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