social security disability benefits reform .act of 1984 and related amendments

569 Pages·2008·11.06 MB·English

SOCIAL SECURITY
DISABILITY BENEFITS REFORM .ACT
OF 1984
AND RELATED AMENDMENTS
Volumes 1, 2
H.R. 3755
PUBLIC LAW 98-460
98th Congress
DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Social Security Admnistration
SOCIAL SECURITY
DISABILITY BENEFITS REFORM ACT
OF 1984
AND RELATED AMENDMENTS
Volumes 1, 2
H.R. 3755
PUBLIC LAW 98-460
98th Congress
REPORTS, BILLS,
DEBATES, AND ACT
DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Social Security Administration
Office of Policy and External Affairs
Office of Legislaflon and Congressional Affairs
PREFACE
This 2 volume compilation contains historical documents pertaining to P.L. 98-460, Social
Security Disability Benefits Reform Act of 1984, and related disability amendments. The book
contains congressional debates, a chronological compilation of documents pertinent to the
legislative history of the public law and listings of relevant reference materials.
Pertinent documents include:
• Committee reports
• Differing versions of key bills
• The Public Laws
• Legislative history
The books are prepared by the Office of Legislation and Congressional Affairs, Legislative
Reference Office, and are designed to serve as helpful resource tools for those charged with
interpreting laws administered by the Social Security Administration.
TABLE OF CONTENTS
Volume 1
SOCIAL SECURITY DISABILITY BENEFITS REFORM ACT OF 1984 — P.L. 98.460 AND
RELATED AMENDMENTS
I. Reported to and Passed House (Actions on H.R. 3755)
A. Committee on Ways and Means Report,
House Report No. 98-618 (to accompany H.R. 3755)—March 14, 1984
B. Committee Bill Reported to the House—
H.R. 3755 (reported with amendments)— March 14, 1984
C. House Debate—Congressional Record—March 22 and 27, 1984
D. House-passed Bill
(as referred to the Senate)—March 28, 1984
E. Legislative Bulletin No. 98-38—March 28, 1984
II. Reported to and Passed Senate (Actions on S. 476)
A. Legislative Bulletins Nos. 98-43 and 98-44—May 16-17, 1984
B. Committee on Finance Report
Senate Report No. 98-466 (to accompany S. 476)—May 18, 1984
C. Committee Bill Reported to the Senate
S. 476 (reported with amendments)—May 18, 1984
D. Senate Debate and Senate-passed bill—Congressional Record—May 22, 1984
III. House and Senate Conference (reconciling the differences in the disagreeing votes of the two
Houses) — H.R. 3755
A. Senate Appointed Conferees—Congressional Record—May 22, 1984
B. House Appointed Conferees—Congressional Record—June 11 1984
C. Conference Comparison of H.R. 3755, Social Security Disability Amendments of 1984,
House Ways and Means Committee Print No. 98-32—1984
D. Legislative Bulletin No. 98-51, July 27, 1984
E. Conference Report
House Report No. 98-1039—September 19, 1984
F. House Accepted Conference Report— Congressional Record—September 19, 1984
G. Senate Accepted Conference Report—Congressional Record—September 19, 1984
H. Legislative Bulletin No. 98-53—September 19, 1984
IV. Public Law 98-460 — Social Security Disability Benefits Reform Act of 1984
A. Public Law 98-460—October 9, 1984
B. President's Signing Statement—October 9, 1984
TABLE OF CONTENTS
Volume 1
C. Legislative Report No. 2, Social Security Disability Benefits Reform Act of 1984—
September 21, 1984
D. Social Security Disability Benefits Reform Act of 1984: Legislative History and Summary
of Provisions—Reprint from Social Security Bulletin—April 1985
VOLUME 2
V. Public Law 97-455 (H.R. 7093), Taxes orl Virgin Island Source Income and Social Security
Act Amendments (No House committee report or committee reported bill on the disability
provisions)
A. Committee on Finance Report Senate Report No. 97-648, (to accompany
H.R. 7093)—October 1, 1982
B. Committee Bill Reported to the Senate
H.R. 7093 (reported with amendments)—September 30, 1982
C. Legislative Bulletin No. 73, September 29, 1982
D. Senate Debate—Congressional Record—October 1, 1982 and December 3, 1982
E. Legislative Bulletin No. 76, December 6, 1982
F. House Debate—Congressional Record—December 14, 1982
0. Legislative Bulletin No. 77, December 14, 1982
H. Senate Appointed Conferees—Congressional Record—December 16, 1982
I. House Appointed Conferees—Congressional Record—December 18, 1982
J. Conference Report
House Report No. 97-985—December 21, 1982
K. House and Senate Agreed to Conference Report—Congressional Record—December 21,
1982
L. Legislative Bulletin No. 79, December 22, 1982
M. Public Law 97-455—January 12, 1983
N. President's Signing Statement—January 12, 1983
VI. Public Law 98-118 (H.R. 4101), To Extend the Federal Supplemental Compensation Act of
1982 and Social Security Act Amendments (no Committee reports filed on H.R. 4101)
A. Committee on Ways and Means Report, House Report No. 98-377 (to accompany H.R.
3929)—Excerpts regarding disability—September 22, 1983
B. House Debate on H.R. 3929—Congressional Record—September 29, 1983
C. Senate Debate on 5. 1887 (Floor Amendment Regarding Disability)—Congressional
Record—September 29 and 30, 1983 (No Senate committee report on disability provision)
TABLE OF CONTENTS
Volume 1
D. Legislative Bulletin No. 98-27, October 4, 1983
E. Committee Bill Reported to the House—H.R. 4101—October 6, 1983
F. House Debate on H.R. 4101—Congressional Record—October 6, 1S83
0. Senate Debate on H.R. 4101—Congressional Record—October 6, 1983
H. Legislative Bulletin No. 98-29, October 7, 1983
1. Public Law 98-1 18—October 11, 1983
VII. Appendix
A. H.R. 6181, Disability Amendments of 1982—April 28, 1982
B. Committee on Ways and Means Report, House Report No. 97-588 (to accompany H.R.
6181)—May 26, 1982
C. HHS News, Statement by HHS Secretary Margaret Heckler on Reforms in the Disability
Review Process—June 7, 1983
D. Committee on Ways and Means, Subcommittee on Social Security Bill, as Introduced
(H.R. 3755)—August 3, 1983
E. Staff Data and Materials Related to the Social Security Act Disability Programs—
Committee on Finance Print No. 98-93—September 1983
F. H.R. 4170, Tax Reform Act of 1983, Title IX, Social Security Disability Benefits Reform
Act of 1983—October 21, 1983 (Title IX of H.R. 4170 is identical to H.R. 3755. Title IX
was dropped from H.R. 4170 during House floor consideration of the bill.)
G. HHS News, Statement by Secretary Margaret Heckler on Suspension of the Disability
Review Process—April 13, 1984
Listing of Reference Materials

I.iflIulUcti iw. u
97m Cowoara SENATE J
td8r.,.jon No. 97.-fIR
J
RATE OF CERTAIN TAXES PAID TO
VIRGIN ISLANDS
Ocroeaa 1 (IeIq1atIve day, $!prx,,apjft 5), 1952—Ordered to be printed
Mr. Doii, from the Committee on Finance,
submitted the following
REPORT
together with
ADDITIONAL VIEWS
f To accompany HR. 7098J
(Including Cost FstImate of the ConreesIonal Budget Omcej
The Committee on Finance, to which was referred the bill (TIR.
7093) to amend the Internal Revenue Code of 1954 to reduce the rate
of ce;tain taxes paid to the Virgin Islands on Virgin Islandssource
income, having considered the same, reports favorably thereon with
an amendment to the text and an amendment to the title and recom-
mends that the bill as amended do pass.
The amendment to the text is shown in italic in the reported bill.
I. SUMMARY
Virgin I*ianda Taxea
The Treasury and the Government of the Virgin Islands take the
position that present lnw imposes a 30-percent tax on the non-Virgin
Islands recipient of certain Virgin Islands source passive invest-
nient income, and that present law also imposes withholding at the
source by the V.1. payor of such income. The bill will reduce this tax
to 10 percent when the recipient is a U.S. citizen, resident alien, or
corporation and imposes a corresponding witliholding obligation on
the V.!. payor of such income. The bill will allow the V.1. Government
further to reduce this 10-percent rate in its discretion. The bill will
hot affect payments of V.1. source passive income to non-U.S. persons.
2
Social Security Disability Insurance (DI)
In addition, the bill will make several changes in the social security
disability insurance program u'elating to the continuing disability in-
vestigation (CDI) process. The bill will continue DI benefits and
Medicare coverage, for certain terminated beneficiaries pursuing an
appeal, through the Administrative Law Judge (ALl) hearing; allow
the Secretary to slow the CDI process: requires the Secretary to obtain
medical evidence available for the 12-month period precedini! the
CDI review; and require the Secretary to report semiannually on
various aspects of the CDI proce.
H. EXPLANATION OF THE BILL
A. Rate of Certain Taxes Paid to Virgin Islands (sec. I of the
bill and new sees. 934A and 1444 of the Code)
Present Law
VirginIslands taxation In general
Under the Revised Organic Act of 1954, the U.S. Internal Revenue
Code is generally applied in the Virgin Islands as the localterritorial
tax law, except that tax proceeds are paid into the treasury of the
Virgin Islands. This system has been interpreted to require that, in
applying the Internal Revenue Code in the Virgin Islands, the name
"Virgin Islands" is substituted, where appropriate, for the name
"United States" where it appears in the U.S. Code(the so-called
"mirror image" system).
Corporate and individual "inhabitants" of the Virgin Islands are
taxed on their worldwideincome by the Virgin Islands and, by paying
relieved of any income tax liability
such tax to the Virgin Islands, are
their U.S.-source income. All corpo-
to the Federal Treasury, even on
considered to be inhabi-
rations chartered in the Virgin Islands are
certain circumstances, a United States
tants of the Virgin Islands. In
inhabitant of the Virgin Islands.
corporation may also qualify as an
limits the power of the Virgin
The U.S. Internal Revenue Code
income tax (sec. 934). The Virgin
Islands government to reduce its
attributable to income derived from
Islands may not reduce its taxes
States. With respect to non-U.S. source
sources within the United
income, the Virgin Islands may not reduce its corporate tax except
test." This
that meet a so-called "80—50
to U.S. and V.1. corporations
to reduce taxes only for those U.S.
test allows the Virgin Islands
derived for the past three taxable
and V.1. corporations that have
thereof) at least 80 percent of their gross
years (or applicable part
and at least 50 percent' of their gross in-
income from V.1. sources
Piece) Reaponeibility Act of 1983, Piuiulic lAw
'Under the Tax Equit7 c.nordporetion'e grOes income that mwit hederived from
91—248. the percentage of a bneineea In the virgin Jsliinifl 1$ Inerea%Pd from
the active conduct of a trade orincrease will be phased in over three years. For
Ota ipaet,rlece yneta tors ( b1e9 gi,ienrncienngt .a Tftiedre Dec. 3a1f.t e1r0 D83e.c t.u 3e1 p, e1r9c8e3n.t athgee piIc,nrehnintiaiogfel wilinilli l1a*t loorn,
percent. for tixable years betag,i,nanliilneg years hcginnflg after Uccember31, i9K4 end
will lie 60 liereent, and fnr
thereafter tue prreeliliige lhnltpaeilrOeeiin wteirlel —heS 6O p peercrceennt.t—-of gross income that must
Thet Act did not effect the
be derived from Virgin Island' ourceS.
3
come from the active comluct of a trade or business within the Virgin
Islands. Acting within the constraint of th 80—50 test1 the Govern-
ment, of the Virgin 1lands has established further eriterift for tax
reductions, such as a $50,000 minimum investment and certain em-
ployment criteria.
Taxi1ion of pzaaiveincome hi theVirgin Islands
U.S. law generally imposes a 30-percent tax on the. gross amount
of dividends, interest., royalties, and other fixed or determinable an-
nual or periodical income (hereinafter sometimes referredto as passive
investmiient income) paid by U.S. persons to nonresident aliens and
foreign corporation.q when that income is not effectively connected with
tho conduct of a U.S. trade or business by the foreign person. This 30-
percent rate is often reduced, or eliminated, by income tax treaties.
U.S. law also generally imposes on the payor of such passive invest.
ment income a duty to withhohl the tti due (secs. 1441 and 1442).
Under the minor system, the Virgin Islands imposes & similer
80-percent tax on passive investment income paid by V.1. persons
to non-V.I. nersons, including U.S. persons. The Virgin Islands
cannot now forgive this tax, since the tax is upon the recipient and
not upon the V.1. payor. A U.S. recipient of passive income from the
Virgin Islands may generally take a foreign tax credit for any such
tax (subject to limits) against its U.S. tax liability. Althoughthere is
somo dispute about the underlying tax liability of the recipient ofpas-
sive investment income from the Virgin Islands, it is the Internal
Revenue Service's position that the recipient is liablefor the tax (Rev.
Rul. 78—327, 1978—2C.B. 196).'
In addition, there is a dispute about the nuthority of the Virgin
Islands to require withholding of this tax (as opposed to its author-
ity to impose the underlying tax). This dispute
ha.q been the subject
of litigation. The U.S. ouirt of Appeals for the Third Circuit held
thaL the Virgin Islands did not have the power to impose withhold-
ing. The basis of this decision was a Treasury Regulation that pro-
vided that U.S. persons were not required to withhold on payments
of passive investment income to V.1. persons: the Thirl Circuit mir-
ror('(l that Regulation to hold that V.!.
persons did not have to with-
hold on payments to U.S.
persons. The Treasury Department has since
revoked the Regulation in question. Therefori,
according to the IRS,
V.1. persons who pay passive income to U.S. persons must withhold
tax at. a 80-percent rate. However,
some persons have questioned the
validity of the IRS revocation of that Regulation. The revocation
occurred simultaneously with issuance of a Revenue Procedure that
continued the rule that 'U.S. persons neednot withhold on payments of
passive investment income to V.1.
persons. Therefore, some persons
allego that the revocation of the Regulation
was invalid and that the
Virgin Islands does not have the power to require withholding of the
tax. It is understood that these issues aire again in controversy.
i
th'Nvok Iwnf eirr eInIIciper iIdairotuyl da hIoeu dtr aihwIn dfirsopmu ttheu dIeui,Ion to the correctn of
it hhokIIn hI iga lint,. or about thedIspute as to the related
dcnicd. 43.5 (UT.hSv.c1rn80m (rin9t7o8f).the VrØn 1s1ar4 560 F. 2d 180 (3d CIr. 1977),cerf.