A bill to amend the Internal Revenue Code of 1954 to provide that the provisions which increase the Federal unemployment tax in States which have outstanding loans will not apply if the State makes certain repayments.

(Reported to Senate from the Committee on Finance with amendment, S. Rept. 96-998)

Amends the Internal Revenue Code to provide that the credit against employment tax liability available to an employer shall not be reduced due to advances made to the unemployment account of a State under title XII (Advances to State Unemployment Funds) of the Social Security Act, if such State repays during the one-year period ending on November 9 of the taxable year to advances made to its unemployment account and such repayments are not less than the sum of the State's potential additional taxes for the taxable year, plus any advances made to such State during the one-year period. Empowers the Secretary of Labor to require a State to furnish any information necessary to determine if such State has made proper repayments.

Permits States which borrow Federal funds for payment of unemployment benefits to qualify for a cap on any increase in employer tax liability due to the failure of such State to repay outstanding loans, if such State meets certain minimum solvency requirements with respect to its unemployment compensation system. Authorizes the Secretary of Labor to disqualify a State for such cap if he determines that the State has not provided adequate information with respect to the solvency of its unemployment compensation system.

Permits States which have current loan balances for unemployment compensation benefits to waive certain repayment during periods of high unemployment.

Eliminates the concept of "National Trigger" of unemployment benefits when unemployment nationwide reaches certain levels, in favor of State trigger points which would authorize extended unemployment benefits only in States with a certain level of unemployment. Permits States to designate a rate of insured unemployment which is 5 percent or higher for purposes of triggering extended unemployment benefits.

Establishes a Federal Employees Compensation Account in the Unemployment Trust Fund to reimburse the States for the costs of unemployment benefits based on Federal employment.

Prohibits the payment of extended unemployment benefits to any individual who has less than 20 weeks of employment as a basis for receiving basic unemployment benefits. Prohibits the payment of extended benefits to individuals who leave their jobs voluntarily or for misconduct.

Approves certain Department of Labor regulations which require the elimination of extended unemployment benefits from the computation of the insured unemployment rate.