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.