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CHAPTER V—BUREAU OF EMPLOYMENT SECURITY, SOCIAL SECURITY ADMINISTRATION, FEDERAL

SECURITY AGENCY

Note: Other regulations issued by the Federal Security Agency appear in Chapters I, III, and IV of this title, Title 21, Chapter I, Title 42, and Title 45.

Part 601 602

603

Administrative procedure.
Cooperation of United States Employment Service and States in establishing

and maintaining a national system of public employment offices. Instructions to State agencies for preparation and submittal of State plan of

operation under the Wagner-Peyser Act.
Policies of the United States Employment Service.
Reconversion unemployment benefits for seamen.

604 605

AUTHORITY: $$ 601.1 to 601.11 issued under sec. 12, 48 Stat. 117; 29 U. S. C. 49k. Interpret or apply 49 Stat. 626, as amended, 53 Stat. 183, as amended, 48 Stat. 113, as amended; 42 U. S. C. 501-503, 26 U. S. C. 1600–1611, 29 U. S. C. 49-491.

SOURCE: $ $ 601.1 to 601.11 appear at 13 F. R. 8375.

Part 601—Administrative

Procedure
Subpart A-Approval, Certification and Findings

With Respect to State Laws and Plans of
Operation for Normal and Additional Tax

Credit and Grant Purposes Sec. 601.1 General. 601.2 Approval of State unemployment

compensation laws. 601.3 Findings with respect to State laws

and plans of operation, 601.4 Certification for tax credit. 601.5 Withholding payments and certifica

tions. Subpart B-Grants, Advances and Audits 601.6 Grants for administration of unem

ployment insurance and employ

ment service. 601.7 Request for funds for servicemen's

readjustment allowance program. 601.8 Agreement with Postmaster General. 601.9 Advances to States; Federal Unem

ployment Account. 601.10 Reconversion unemployment benefits

for seamen. 601.11 Audits.

SUBPART A APPROVAL, CERTIFICATION AND

FINDINGS WITH RESPECT TO STATE LAWS AND
PLANS OF OPERATION FOR NORMAL AND
ADDITIONAL TAX CREDIT AND GRANT
PURPOSES

$ 601.1 General State unemployment compensation laws are approved and certified as provided in section 1603 of the Internal Revenue Code; findings are made regarding reduced rates permitted by a State law (section 1602 (a) of the Internal Revenue Code) and such laws are certified as provided in section 1602 (b); findings are made regarding the inclusion of specified provisions (section 303 (a) of the Social Security Act) in State laws approved under section 1603 (a) of the Internal Revenue Code; findings are made whether the States

act.

have accepted the provisions of the $ 601.3 Findings with respect to State Wagner-Peyser Act and whether their laws and plans of operation. For purplans of operation for public employment poses of grants, findings are made reoffices comply with the provisions of said garding the inclusion in State unemploy

ment compensation laws, approved under Normal and additional tax credit is section 1603 (a) of the Internal Revenue given to taxpayers against taxes im Code, of provisions required by section posed by section 1600 of the Internal 303 (a) of the Social Security Act (see Revenue Code.

$ 601.2); findings are also made whether Grants of funds are made to States a State has accepted the provisions of the for administration of their employment Wagner-Peyser Act and whether its plan security laws if their unemployment of operation for public employment of compensation laws and their plans of fices complies with the provisions of said operation for public employment offices act. For purposes of additional tax meet required conditions of Federal law. credit, findings are made regarding re(Section 303 (a) of the Social Security duced rates of contributions permitted Act; section 1603 (a) of the Internal by the State law (section 1602 (a) (1) Revenue Code; sections 6, 7 and 8 of the of the Internal Revenue Code). Wagner-Peyser Act.)

So that the Commissioner for Social $ 601.2 Approval of State unemploy

Security may be enabled to determine ment compensation laws. States may at

the status of State laws and plans of their option submit their unemployment

operation, all relevant State materials, compensation laws for approval (section

such as statutes, executive and adminis1603 (a) of the Internal Revenue Code).

trative orders, legal opinions, rules, regu

lations, interpretations, court decisions, (a) Submission. The States submit

etc., are required to be submitted curto the regional representative of the

rently. Bureau of Employment Security four copies of the State unemployment com

(a) Submission. The States submit pensation law, properly certified by an

currently to the regional representative authorized State official to be true and

four copies of relevant State material, complete, together with a written request

properly certified by an authorized State for approval.

official to be true and complete. (b) Review of State law. The Re

(b) Review. The regional representgional Representative reviews the State

ative reviews the State material and forlaw and forwards three copies to the

wards three copies to the central office of central office of the Bureau with his

the Bureau with his comments. The comments. The Bureau reviews the re

Bureau reviews the material from the gional representative's comments and

standpoint of its conformity with section analyzes the State law from the stand

303 (a) of the Social Security Act, secpoint of the requirements of section 1603

tion 1602 (a) of the Internal Revenue (a) of the Internal Revenue Code. The

Code, or the Wagner-Peyser Act, as the Bureau Director makes recommenda

case may be. If questions are raised tions to the Commissioner for Social Se

concerning such conformity, negotiations curity regarding approval of the State

to resolve them are undertaken with law.

State officials. Any questions then re(c) Approval. The Commissioner for

maining unresolved are presented to the

Commissioner with appropriate recomSocial Security determines whether the State law contains the provisions re

mendations. If a State plan of operation quired by section 1603 (a) of the Internal

for public employment offices, and any Revenue Code. If the State law is ap

amendment thereto, complies with the proved, the Commissioner notifies the

provisions of the Wagner-Peyser Act, the Governor of the State within 30 days of

State agency is notified of the approval

of the plan or the amendment as the case the submission of such law.

may require. (d) Certification. On December 31, of each taxable year the Commissioner for

(c) Findings. The Commissioner Social Security certifies, for the purposes

makes findings as provided in the cited of normal tax credit (section 1601 (a)

sections of the Federal law. In the event (1) of the Internal Revenue Code), to

that the Commissioner is unable to make the Secretary of the Treasury each State the findings required for certification for the law of which he has previously payment or for certification of the law approved. (See also $ 601.5.)

for purposes of additional tax credit,

further discussions with State officials are undertaken.

$ 601.4 Certification for tax credit. Within 30 days after submittal of a State unemployment compensation law for such purpose, the Commissioner certifies to the State agency, in accordance with the provisions of section 1602 (b) (3) of the Internal Revenue Code, his findings regarding reduced rates of contributions allowable under such law. On December 31 of each taxable year the Commissioner certifies to the Secretary of the Treasury the law of each State, certified with respect to such year under section 1603 of the Internal Revenue Code (see $ 601.2), which he finds allows reduced rates with respect to such taxable year only in accordance with the provisions of section 1602 (a) of the Internal Revenue Code.

With regard to certification for payment, see 601.6.

$ 601.5 Withholding payments and certifications(a) When withheld. Payments are not made where the provisions required by section 303 (a) of the Social Security Act are found no longer to be included in the State unemployment compensation law. In addition, payments of funds to States and/or yearend certification of State laws are withheld, after reasonable notice and opportunity for hearing, in the following circumstances as required by indicated statutory provisions:

(1) Where the State unemployment compensation law has been so changed as no longer to meet the conditions required by Federal law (sections 1602 (b) (3) and 1603 (c) of the Internal Revenue Code); or

(2) Where in the administration of the State unemployment compensation law there has been a failure to comply with required provisions of such law (section 303 (b) (2) of the Social Security Act and sections 1602 (b) (3), and 1603 (c) of the Internal Revenue Code); or

(3) Where in the administration of the State unemployment compensation law there has been a denial, in a substantial number of cases, of benefits due under such law (section 303 (b) (1) of the Social Security Act); or

(4) Where a State fails to make its unemployment compensation records available to the Railroad Retirement Board or fails to cooperate with Federal agencies charged with the administration of unemployment compensation

laws (section 303 (c) of the Social Security Act); or

(5) Where a State no longer has a plan of operation for public employment offices complying with the provisions of the Wagner-Peyser Act; or

(6) Where a State agency has not properly expended, in accordance with an approved plan of operation, the Federal monies paid it for administration of its public employment service.

(b) Informal discussion. Such hearings are generally not called, however, until after every reasonable effort has been made by regional and central office representatives to resolve the question involved by conference and discussion with State officials. Formal notification of the date and place of a hearing does not foreclose further negotiations with State officials.

(c) Notice of noncertification. If, at any time during the taxable year, the Commissioner for Social Security has reason to believe that a State whose unemployment compensation law he has previously approved may not be certified, he promptly notifies the Governor of the State to that effect (section 1603 (d) of the Internal Revenue Code),

(d) Hearings. Hearings are held pursuant to the provisions of section 303 (b) and (c) of the Social Security Act, sections 1602 (b) (3) and (c) of the Internal Revenue Code and the Regulations of the United States Employment Service.

(1) Notice of hearing is sent by the Commissioner for Social Security to the State employment security agency. The notice sets forth the purpose of the hearing and the time, date and place at which the hearing will be held. At a hearing the State is given an opportunity to present arguments and all relevant evidence, written or oral. The Commissioner presides at hearings and makes the necessary determination or findings, on the basis of the record of such hearings. A notice of the Commissioner's determination or finding is sent to the State employment security agency. SUBPART B-GRANTS, ADVANCES AND AUDITS

$ 601.6 Grants for administration of unemployment insurance and employment service. Grants of funds for administration of State unemployment insurance and public employment service programs are made to States under section 302 (a) of the Social Security Act, the Wagner-Peyser Act, and the Appropriation Acts

(a) Requests for funds. The forms and instructions used by State agencies in requesting funds are available upon request from the Bureau of Employment Security, Social Security Administration, Washington 25, D. C., and at the regional offices. The forms and instructions call for detailed information for each budgetary period concerning the specific amounts requested for personal services and other current expenses of State agencies, supported by work-load and unit-cost estimates. Supplementary budget requests are processed in the same manner as regular requests. The Bureau's representatives in the regional offices furnish assistance to the State agencies in preparing requests for funds.

(b) Processing of requests. State agencies send their requests for funds to the regional representative of the Bureau who reviews the requests and forwards them to the central office of the Bureau with his recommendation as to the amounts necessary for proper and efficient administration of the State unemployment compensation law and employment service program.

The Bureau appraises the requests and the recommendations of the regional representatives from a Nation-wide point of view, examining each State's request in the light of the experience of other States to insure equitable treatment among the States in the allocation of funds made available by Congress for the administration of State unemployment compensation laws and public employment service programs. The request is then presented to the Commissioner with the recommendation of the Bureau.

(c) Action by Commissioner. If the Commissioner approves the State's budget request, the State agency is notified; and, provided the conditions precedent to grants continue during the budgetary period, certifications for payment, under the approved budget, stating the amounts, are made by the Commissioner to the Secretary of the Treasury quarterly. Upon denial of a request, in whole or in part, the State agency is notified and the Bureau's Regional Representative is instructed to negotiate with the State with a view to removing the basis for denial.

$ 601.7 Request for funds for servicemen's readjustment allowance program.

Allotments of funds for the administration of the servicemen's readjustment allowance program are made to States by the Commissioner for Social Security upon quarterly certification by the Administrator of Veterans Affairs under section 1100 (f) of the Servicemen's Readjustment Act of 1944. The certifications by the Administrator of Veterans' Affairs are based upon requests submitted to the Veterans' Administration by the State agencies administering unemployment insurance and employment service programs.

§ 601.8 Agreement with Postmaster General. The Social Security Administration and the Postmaster General have been directed by the Congress (Title I of the Supplemental Federal Security Agency Appropriation Act, 1949) to prescribe a mutually satisfactory procedure whereby official State employment security postal matter will be handled without the prepayment of postage. In lieu of such prepayments, the Social Security Administration periodically certifies to the Secretary of the Treasury for payment to the Post Office Department the amount necessary to cover the cost of State agency mailings. The amount of payment is based on a formula agreed upon by the Social Security Administration and the Post Office Department.

8 601.9 Advances to States; Federal Unemployment Account. Title XII of the Social Security Act provides that if the balance in a State's account in the Unemployment Trust Fund falls below a level specified in the statute, the State employment security agency may apply to the Social Security Administration for an advance from the Federal Unemployment Account, such advance to be repaid by the State at such time as the State fund exceeds a stipulated amount.

Applications for advances are submitted by State agencies to the regional representative of the Bureau for transmittal to the central office of the Bureau. The Bureau reviews applications and makes appropriate recommendations to the Commissioner for Social Security. If the Commissioner finds that the prescribed conditions for the advance are met, he certifies to the Secretary of the Treasury the amount to be transferred from the Federal Unemployment Account to the State's account in the Unemployment Trust Fund.

$ 601.10 Reconversion unemployment benefits for seamen. Payments to States

dits, Office of Federal-State Relations, to determine whether the expenditures have been made for purposes and in amounts found necessary by the Commissioner for Social Security for proper and efficient administration of the State's unemployment compensation law and public employment service.

(a) If the audit, as reviewed by the regional office, results in no exceptions, the agency is advised by letter of this result. If the regional office concurs in exceptions taken by the examining auditor, the State agency is given an opportunity within 15 days to concur in them or to submit additional facts for purposes of clearing the exceptions. If the agency's reply does not result in clearance of the exceptions, they are presented to the Commissioner with the agency's statement of its reasons for nonconcurrence.

(b) The Commissioner, upon consideration of the audit report and the agency's reply, determines whether (1) the exceptions are properly taken and replacement of the amount involved is required, or (2) the exception should be withdrawn. In either case the State agency is notified of the action taken.

for reconversion unemployment benefits to seamen are made under section 1305 of the Social Security Act. Each State is entitled to receive, either in advance or by way of reimbursement as determined by the Administrator, an amount equal to the additional cost to the State of payments of compensation made under and in accordance with the State's agreement with the Administrator.

(a) Requests for funds. The forms and instructions used by State agencies in requesting funds are available upon request from the Bureau of Employment Security, Social Security Administration, Washington 25, D. C. In the case of advances, the forms and instructions call for information on the estimated number of reconversion unemployment benefits payable quarterly, the estimated amount of such payments and the estimated amount payable from State funds under the State unemployment compensation law. With respect to reimbursement for benefits already paid, the States submit reports showing the amount chargeable to Federal funds under section 1305. The Bureau's representatives in the regional offices furnish assistance to the State agencies in preparing requests for funds.

(b) Processing of requests. State agencies send their requests for funds directly to the Bureau of Employment Security, Social Security Administration, Washington 25, D. C. The Bureau reviews the requests for correctness of the amounts involved and to insure that the total of all such requests does not exceed the amount appropriated by Congress. Requests are then submitted to the Federal Security Administrator for approval and certification to the Secretary of the Treasury of the amount payable to each State.

(c) Costs of administration. No separate grants are made to States for the administration of reconversion unemployment benefits for seamen. State agencies absorb any such costs within their regular budgets for unemployment insurance and employment service administration.

$ 601.11 Audits. As soon as practicable after the close of each budgetary period, or at other times as necessary, the books of account and records pertaining to employment security administration in each State are audited by the Division of State-Grant-in-Aid AU

Part 602—Cooperation of United

States Employment Service and States in Establishing and Maintaining a National System of Public Employment Offices

Sec. 602.1 Definitions. 602.2 Placement services. 602.3 Employment counseling and selective

placement services. 602.4 Occupational analysis and industrial

services. 602.5 Special service for veterans. 602.6 Labor market information service. 602.7 Participation in community pro

grams. 602.8 Agricultural and related industry

placement services. 602.9 Services and facilities. 602.10 Organization. 602.11 Arrangements between United States

Employment Service and related

Federal agencies. 602.12 Employment Service Manual. 602.13 Personnel administration. 602.14 Fiscal effo

Fiscal affairs. 602.15 Advisory councils. 602.16 Confidential character of records. 602.17 Reports and studies. 602.18 State plans of operation. 602.19 Delegation of authority.

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