
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC1322]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
          SUBCHAPTER XII--ADVANCES TO STATE UNEMPLOYMENT FUNDS
 
Sec. 1322. Repayment by State; certification; transfer; interest 
        on loan; credit of interest on loan
        

(a) Repayment by State; certification; transfer

    The Governor of any State may at any time request that funds be 
transferred from the account of such State to the Federal unemployment 
account in repayment of part or all of that balance of advances, made to 
such State under section 1321 of this title, specified in the request. 
The Secretary of Labor shall certify to the Secretary of the Treasury 
the amount and balance specified in the request; and the Secretary of 
the Treasury shall promptly transfer such amount in reduction of such 
balance.

(b) Interest on loan

    (1) Except as otherwise provided in this subsection, each State 
shall pay interest on any advance made to such State under section 1321 
of this title. Interest so payable with respect to periods during any 
calendar year shall be at the rate determined under paragraph (4) for 
such calendar year.
    (2) No interest shall be required to be paid under paragraph (1) 
with respect to any advance or advances made during any calendar year 
if--
        (A) such advances are repaid in full before the close of 
    September 30 of the calendar year in which the advances were made,
        (B) no other advance was made to such State under section 1321 
    of this title during such calendar year and after the date on which 
    the repayment of the advances was completed, and
        (C) such State meets funding goals, established under 
    regulations issued by the Secretary of Labor, relating to the 
    accounts of the States in the Unemployment Trust Fund.

    (3)(A) Interest payable under paragraph (1) which was attributable 
to periods during any fiscal year shall be paid by the State to the 
Secretary of the Treasury prior to the first day of the following fiscal 
year. If interest is payable under paragraph (1) on any advance 
(hereinafter in this subparagraph referred to as the ``first advance'') 
by reason of another advance made to such State after September 30 of 
the calendar year in which the first advance was made, interest on such 
first advance attributable to periods before such September 30 shall be 
paid not later than the day after the date on which the other advance 
was made.
    (B) Notwithstanding subparagraph (A), in the case of any advance 
made during the last 5 months of any fiscal year, interest on such 
advance attributable to periods during such fiscal year shall not be 
required to be paid before the last day of the succeeding taxable year. 
Any interest the time for payment of which is deferred by the preceding 
sentence shall bear interest in the same manner as if it were an advance 
made on the day on which it would have been required to be paid but for 
this subparagraph.
    (C)(i) In the case of any State which meets the requirements of 
clause (ii) for any calendar year, any interest otherwise required to be 
paid under this subsection during such calendar year shall be paid as 
follows--
        (I) 25 percent of the amount otherwise required to be paid on or 
    before any day during such calendar year shall be paid on or before 
    such day; and
        (II) 25 percent of the amount otherwise required to be paid on 
    or before such day shall be paid on or before the corresponding day 
    in each of the 3 succeeding calendar years.

No interest shall accrue on such deferred interest.
    (ii) A State meets the requirements of this clause for any calendar 
year if the rate of insured unemployment (as determined for purposes of 
section 203 of the Federal-State Extended Unemployment Compensation Act 
of 1970) under the State law of the period consisting of the first 6 
months of the preceding calendar year equaled or exceeded 7.5 percent.
    (4) The interest rate determined under this paragraph with respect 
to any calendar year is a percentage (but not in excess of 10 percent) 
determined by dividing--
        (A) the aggregate amount credited under section 1104(e) of this 
    title to State accounts on the last day of the last calendar quarter 
    of the immediately preceding calendar year, by
        (B) the aggregate of the average daily balances of the State 
    accounts for such quarter as determined under section 1104(e) of 
    this title.

    (5) Interest required to be paid under paragraph (1) shall not be 
paid (directly or indirectly) by a State from amounts in its 
unemployment fund. If the Secretary of Labor determines that any State 
action results in the paying of such interest directly or indirectly (by 
an equivalent reduction in State unemployment taxes or otherwise) from 
such unemployment fund, the Secretary of Labor shall not certify such 
State's unemployment compensation law under section 3304 of the Internal 
Revenue Code of 1986. Such noncertification shall be made in accordance 
with section 3304(c) of such Code.
    (6)(A) For purposes of paragraph (2), any voluntary repayment shall 
be applied against advances made under section 1321 of this title on the 
last made first repaid basis. Any other repayment of such an advance 
shall be applied against advances on a first made first repaid basis.
    (B) For purposes of this paragraph, the term ``voluntary repayment'' 
means any repayment made under subsection (a) of this section.
    (7) This subsection shall only apply to advances made on or after 
April 1, 1982.
    (8)(A) With respect to interest due under this section on September 
30 of 1983, 1984, or 1985 (other than interest previously deferred under 
paragraph (3)(C)), a State may pay 80 percent of such interest in four 
annual installments of at least 20 percent beginning with the year after 
the year in which it is otherwise due, if such State meets the criteria 
of subparagraph (B). No interest shall accrue on such deferred interest.
    (B) To meet the criteria of this subparagraph a State must--
        (i) have taken no action since October 1, 1982, which would 
    reduce its net unemployment tax effort or the net solvency of its 
    unemployment system (as determined for purposes of section 3302(f) 
    of the Internal Revenue Code of 1986); and
        (ii)(I) have taken an action (as certified by the Secretary of 
    Labor) after March 31, 1982, which would have increased revenue 
    liabilities and decreased benefits under the State's unemployment 
    compensation system (hereinafter referred to as a ``solvency 
    effort'') by a combined total of the applicable percentage (as 
    compared to such revenues and benefits as would have been in effect 
    without such State action) for the calendar year for which the 
    deferral is requested; or
        (II) have had, for taxable year 1982, an average unemployment 
    tax rate which was equal to or greater than 2.0 percent of the total 
    of the wages (as determined without any limitation on amount) 
    attributable to such State subject to contribution under the State 
    unemployment compensation law with respect to such taxable year.

In the case of the first year for which there is a deferral (over a 4-
year period) of the interest otherwise payable for such year, the 
applicable percentage shall be 25 percent. In the case of the second 
such year, the applicable percentage shall be 35 percent. In the case of 
the third such year, the applicable percentage shall be 50 percent.
    (C)(i) The base year is the first year for which deferral under this 
provision is requested and subsequently granted. The Secretary of Labor 
shall estimate the unemployment rate for the base year. To determine 
whether a State meets the requirements of subparagraph (B)(ii)(I), the 
Secretary of Labor shall determine the percentage by which the benefits 
and taxes in the base year with the application of the action referred 
to in subparagraph (B)(ii)(I) are lower or greater, as the case may be, 
than such benefits and taxes would have been without the application of 
such action. In making this determination, the Secretary shall deem the 
application of the action referred to in subparagraph (B)(ii)(I) to have 
been effective for the base year to the same extent as such action is 
effective for the year following the year for which the deferral is 
sought. Once a deferral is approved under clause (ii)(I) of subparagraph 
(B) a State must continue to maintain its solvency effort. Failure to do 
so shall result in the State being required to make immediate payment of 
all deferred interest.
    (ii) Increases in the taxable wage base from $6,000 to $7,000 or 
increases after 1984 in the maximum tax rate to 5.4 percent shall not be 
counted for purposes of meeting the requirement of subparagraph (B).
    (D) In the case of a State which produces a solvency effort of 50 
percent, 80 percent, and 90 percent rather than the 25 percent, 35 
percent, and 50 percent required under subparagraph (B), the interest 
shall be computed at an interest rate which is 1 percentage point less 
than the otherwise applicable interest rate.
    (9) Any interest otherwise due from a State on September 30 of a 
calendar year after 1982 may be deferred (and no interest shall accrue 
on such deferred interest) for a grace period of not to exceed 9 months 
if, for the most recent 12-month period for which data are available 
before the date such interest is otherwise due, the State had an average 
total unemployment rate of 13.5 percent or greater.

(c) Credit of interest on loan

    Interest paid by States in accordance with this section shall be 
credited to the Federal unemployment account established by section 
1104(g) of this title in the Unemployment Trust Fund.

(Aug. 14, 1935, ch. 531, title XII, Sec. 1202, as added Aug. 5, 1954, 
ch. 657, Sec. 3, 68 Stat. 672; amended Pub. L. 86-778, title V, 
Sec. 522(a), Sept. 13, 1960, 74 Stat. 979; Pub. L. 97-35, title XXIV, 
Sec. 2407(a), (b)(2), Aug. 13, 1981, 95 Stat. 879, 880; Pub. L. 97-248, 
title II, Sec. 274(a), Sept. 3, 1982, 96 Stat. 557; Pub. L. 98-21, title 
V, Secs. 511, 514, Apr. 20, 1983, 97 Stat. 144, 147; Pub. L. 98-118, 
Sec. 5(a), Oct. 11, 1983, 97 Stat. 804; Pub. L. 99-514, Sec. 2, Oct. 22, 
1986, 100 Stat. 2095; Pub. L. 100-203, title IX, Sec. 9156(a), Dec. 22, 
1987, 101 Stat. 1330-327; Pub. L. 105-33, title V, Sec. 5404(a), Aug. 5, 
1997, 111 Stat. 604.)

                       References in Text

    Section 203 of the Federal-State Extended Unemployment Compensation 
Act of 1970, referred to in subsec. (b)(3)(C)(ii), is section 203 of 
Pub. L. 91-373, title II, Aug. 10, 1970, 84 Stat. 709, as amended, which 
is set out as a note under section 3304 of Title 26, Internal Revenue 
Code.
    The Internal Revenue Code of 1986, referred to in subsec. (b)(5), 
(8)(B)(i), is classified generally to Title 26.


                               Amendments

    1997--Subsec. (b)(2)(C). Pub. L. 105-33 added subpar. (C).
    1987--Subsec. (c). Pub. L. 100-203 added subsec. (c).
    1986--Subsec. (b)(5), (8)(B)(i). Pub. L. 99-514 substituted 
``Internal Revenue Code of 1986'' for ``Internal Revenue Code of 1954''.
    1983--Subsec. (b)(2). Pub. L. 98-118, Sec. 5(a)(1), substituted 
``advance or advances'' for ``advance'' in provisions preceding subpar. 
(A).
    Subsec. (b)(2)(A). Pub. L. 98-118, Sec. 5(a)(2), (3), substituted 
``advances are'' for ``advance is'' and ``advances were'' for ``advance 
was''.
    Subsec. (b)(2)(B). Pub. L. 98-118, Sec. 5(a)(4), substituted 
``advances was completed'' for ``advance was completed''.
    Subsec. (b)(3)(A). Pub. L. 98-21, Sec. 514, which directed 
substitution of ``prior to'' for ``not later than'' was executed, as the 
probable intent of Congress, by making that substitution the first time 
the phrase appeared following ``Secretary of Treasury'' and not the 
second time that phrase appeared.
    Subsec. (b)(3)(C)(i). Pub. L. 98-21, Sec. 511(c), substituted, after 
subcl. II, provision that no interest shall accrue on such deferred 
interest for provision that any interest the time for payment of which 
was deferred under this subparagraph would bear interest in the same 
manner as if it had been an advance made on the day on which it would 
have been required to be paid but for this subparagraph.
    Subsec. (b)(7). Pub. L. 98-21, Sec. 511(b), struck out ``, and 
before January 1, 1988'' after ``April 1, 1982''.
    Subsec. (b)(8), (9). Pub. L. 98-21, Sec. 511(a), added pars. (8) and 
(9).
    1982--Subsec. (b)(3)(C). Pub. L. 97-248 added subpar. (C).
    1981--Subsec. (a). Pub. L. 97-35, Sec. 2407(b)(2), designated 
existing provision as subsec. (a).
    Subsec. (b). Pub. L. 97-35, Sec. 2407(a), added subsec. (b).
    1960--Pub. L. 86-778 amended section generally, designating 
provisions constituting subsec. (a) as entire section, substituting 
``that balance of advances, made to such State under section 1321 of 
this title, specified in the request'' for ``any remaining balance of 
advances made to such State under section 1321 of this title'' and 
inserting ``in reduction of such balance'' and omitting subsecs. (b) and 
(c) pertaining to appropriations and repayable advances which were 
incorporated in sections 1101(d)(1) and 1323 of this title.


                    Effective Date of 1997 Amendment

    Section 5404(b) of Pub. L. 105-33 provided that: ``The amendments 
made by this section [amending this section] shall apply to calendar 
years beginning after the date of the enactment of this Act [Aug. 5, 
1997].''


                    Effective Date of 1987 Amendment

    Section 9156(b) of Pub. L. 100-203 provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply to interest 
paid on advances made on or after the date of the enactment of this Act 
[Dec. 22, 1987].''


                    Effective Date of 1983 Amendment

    Section 5(b) of Pub. L. 98-118 provided that: ``The amendments made 
by this section [amending this section] shall apply to advances made on 
or after April 1, 1982.''


                    Effective Date of 1982 Amendment

    Section 274(b) of Pub. L. 97-248 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply to interest 
required to be paid after December 31, 1982.''

                  Section Referred to in Other Sections

    This section is referred to in section 1321 of this title; title 26 
section 3302.
