BILL ANALYSIS


                                                        H.B. 1233
                                              By: Moffat (Sibley)
                                             Economic Development
                                                         05-22-95
                              Senate Committee Report (Unamended)
BACKGROUND

Federal legislation, passed as a part of the General Agreement on
Tariffs and Trade (GATT) requires state employment agencies to give
unemployment benefit claimants the option of having federal income
taxes withheld from unemployment benefit payments. Unemployment
benefits have been included in taxable income since 1986. The
federal requirement would allow claimants to elect to have taxes
withheld.

PURPOSE

As proposed, H.B. 1233 authorizes an eligible individual to elect
to have federal income tax withheld from benefits.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 207, Labor Code, by adding Subchapter F,
as follows:

                 SUBCHAPTER F. TAX WITHHOLDING

     Sec. 207.101. WITHHOLDING FROM BENEFITS FOR FEDERAL INCOME
     TAX. (a) Authorizes an eligible individual to elect to have
     federal income tax withheld from benefits. Requires the Texas
     Employment Commission (commission) to withhold federal income
     taxes from the benefits of an individual who elects the
     withholding as provided by 26 U.S.C. Section 3301 et seq.
     (Federal Unemployment Tax Act) and Section 303, 42 U.S.C.
     Section 503 (Social Security Act), as those laws are amended
     by P.L. 103-465.
     
     (b) Prohibits the commission from withholding federal income
       tax from benefits as provided by this section until January
       1, 1997.
       
       SECTION 2.   Emergency clause.
           Effective date: upon passage.