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U.S. Code as of:
01/19/04
Section 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.
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