Unemployed Tax Relief Act of 2011

Unemployed Tax Relief Act of 2011 - Amends the Internal Revenue Code to exclude from the gross income of an employee who is separated from employment due to a reduction in force the last regular payment of wages prior to such separation and any severance pay received in connection with such separation. Exempts such wages and severance pay from employment-related taxation.

Requires transfers from the Treasury to employment-related trust funds to compensate for revenues lost by such trust funds due to this Act.

[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2263 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                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

                             June 21, 2011

   Mr. Paul introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to exclude from Federal tax 
     certain payments made in connection with reductions in force.

    Be it 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''.

SEC. 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:

``SEC. 139E. PAYMENTS IN CONNECTION WITH REDUCTIONS IN FORCE.

    ``(a) In 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:

``Sec. 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.
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