To amend title 4 of the United States Code to clarify the treatment of self-employment for purposes of the limitation on State taxation of retirement income.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4019) to amend title 4 of the United States Code to clarify the treatment of self-employment for purposes of the limitation on State taxation of retirement income, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 4019 currently under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 4019, a bill to amend title 4 of the United States Code to clarify the treatment of self-employment for the purposes of the limitation on State taxation of retirement income.

This bill makes technical and clarifying amendments to the legislation enacted in 1996 to restrict the ability of States to tax certain pension income received by their former residents and nonresidents who earned income in that State.

Virtually every State correctly interpreted the law to encompass all retired individuals as Congress intended, and adjusted their tax systems accordingly. However, after 10 years, at least one State has sought to promote an interpretation of the law at odds with congressional intent by taxing the retirement income of partners who no longer live in the State or who may never even have ever lived there.

H.R. 4019 clarifies and reiterates the policy Congress wrote into Public Law 104-95, that States are prohibited from taxing the retirement income of all nonresident retirees, whether the individual is a retired employee, partner or principal.

Mr. Speaker, this bill, which enjoys bipartisan support, merely restores fairness and the original intent of Congress by reaffirming that States should treat all retirees equally.

I urge my colleagues to join me in supporting this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. Speaker, I would like to thank Chairman Sensenbrenner, Ranking Member Conyers and Representatives Watt for their work and leadership on this legislation.

H.R. 4019 is a technical amendment to Public Law 104-95. This legislation clarifies that all retirees should be treated the same with regard to how States may tax retirement payments.

In 1996, Congress passed Public Law 104-95 to prohibit States from taxing the retirement income of nonresident retirees. Essentially, if retirees, most of whom are on fixed incomes, are not living in the State, then no State except the State where the individual resides should tax the retirees' incomes.

After passage of the 1996 law, most States interpreted the law, as it was intended, to apply to all retirees, including employees and partners. One State, however, has recently taken the position that it can treat retired employes of a company and retired partners from partnership differently. This State's interpretation is contrary to the original intent of the law and would allow for a State to tax the retirement payments of a person who retires from a partnership, no matter where that retiree is living. This was not the intent of Congress when the bill was passed, as was emphasized at our hearing by our former colleague Mr. Gekas, who was chair of the subcommittee when Public Law 104-95 was enacted. Congress intended for all retirees to be treated the same under the law, and H.R. 4019 simply clarifies that intent. States must treat all retirees similarly.

I have worked with the State tax administrators and crafted a manager's amendment that passed the full committee by voice vote in order to alleviate their initial concerns, an appreciate their efforts in coming to the table to reach agreement.

I urge all of my colleagues to support H.R. 4019.

Mr. Speaker, I yield myself as much time as I may consume.

Mr. Speaker, I rise in support of H.R. 4019, and I support the measure which is intended to clarify current law that prohibits States from taxing the retirement income of any nonresident, whether the individual is a retired employee, partner or a principal, and says that the benefits reduction calculations under the bill include components from both qualified and nonqualified plans.

Now, since 1996, States have adjusted their tax system to reflect the policy and to allow several different interpretations. The policy would upset expectations and reliance upon the law. And what we are doing is eliminating that possibility. This would also, without this change, further confuse the tax system and certainly lead to unnecessary litigation.

It should be noted that the States affected by Public Law 104-95 have adjusted their tax schemes to comply with the law as they understood it. However, there is one State presently that construes the statute in contravention of the original intent, and if this State, New York, is permitted to implement its interpretation of the bill, other States may follow. This, in turn, would most definitely spur an unlimited amount of needless litigation. So it is essential that for consistency and uniformity that this legislation before us be enacted.

We should note that neither the Federation of Tax Administrators nor the

National Governors Association are opposing this clarification.

This clarification is needed to protect the current State taxation policies, and I am proud to support it and urge my colleagues to do as well

Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. President, I ask unanimous consent that the Committee on Finance be discharged from further consideration of H.R. 4019, and the Senate proceed to its immediate consideration.

Mr. President, I ask unanimous consent that the bill be read a third time and passed, the motion to reconsider be laid upon the table, and that any statement relating to the measure be printed in the Record.