ASSEMBLY LABOR COMMITTEE

STATEMENT TO

ASSEMBLY, No. 2278

STATE OF NEW JERSEY

DATED: SEPTEMBER 19, 1996

      The Assembly Labor Committee reports favorably Assembly Bill No. 2278.

      This bill amends the "unemployment compensation law" to comply with provisions of federal law regarding the voluntary withholding of federal income tax from unemployment compensation benefits. Although unemployment compensation benefits are currently subject to federal income tax, this bill would make the payment of such taxes more convenient for those taxpayers receiving benefits.

      Pursuant to Pub.L.103-465, (26 U.S.C. § 3304 and 3402(p)), formally entitled the "Uruguay Round Agreements Act," but more commonly known as the "General Agreement on Tariff and Trade" or "GATT," effective January 1, 1997, all states must advise individuals filing a new or continuing claim for unemployment compensation benefits that such benefits are subject to federal income tax. Moreover, all states must deduct and withhold Federal income tax from unemployment compensation benefits if the individual receiving such benefits voluntarily requests such deduction and withholding.

      In addition, the bill further amends the "unemployment compensation law" to conform with federal regulations which hold that unemployment compensation may be garnished for child support payments, but not for spousal support.