[Code of Federal Regulations]
[Title 20, Volume 3]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 20CFR606.43]

[Page 41]
 
                      TITLE 20--EMPLOYEES' BENEFITS
 
 CHAPTER V--EMPLOYMENT AND TRAINING ADMINISTRATION, DEPARTMENT OF LABOR
 
PART 606--TAX CREDITS UNDER THE FEDERAL UNEMPLOYMENT TAX ACT; ADVANCES UNDER TITLE XII OF THE SOCIAL SECURITY ACT--Table of Contents
 
                 Subpart E--Relief from Interest Payment
 
Sec. 606.43  Maintenance of solvency effort.

    (a) Applicability. Legislative-action interest deferrals obtained 
under subsection (b)(8) (A) through (C) of section 1202 of the Social 
Security Act are no longer available. Nevertheless, States must maintain 
their solvency effort with respect to any such deferrals approved in 
1983, 1984, and 1985 in order for the deferral to continue to apply in 
each subsequent year of deferral.
    (b) Determination regarding maintenance of solvency effort. (1) The 
UIS Director shall determine if there is a net reduction in solvency 
effort by first estimating revenue receipts and benefit outlays under 
the law in effect in the 12-month period ending on September 30 of the 
year for which continuation of deferral is requested as if it were 
effective in the base year (12-month period for which the first deferral 
was granted).
    (2) The UIS Director shall then compare revenue receipts and benefit 
outlays for the base year (previously estimated at the time of the 
original deferral) with revenue receipts and benefit outlays estimated 
in paragraph (b)(1) of this section.
    (3) If the sum of--
    (i) The percentage increase in revenue receipts from the base year 
to the year for which the continuation of deferral is requested (as 
estimated in paragraph (b)(1) of this section), and
    (ii) The percentage decrease in benefit outlays from the base year 
to the year for which the continuation of deferral is requested (as 
estimated in paragraph (b)(1) of this section),

is equal to or greater than the sum of such percentages achieved for the 
12-month period ending on September 30 of the year for which the latest 
deferral was obtained, the State will have maintained its solvency 
effort, but if less, then a reduction in solvency effort will have 
occurred.
    (4) Notwithstanding the results of the calculation in paragraph 
(b)(3) of this section, if there is no increase in revenue receipts or 
no decrease in benefit outlays between the base year and the year for 
which continuation of deferral is requested, then a reduction in 
solvency effort will have occurred.
    (c) Effect of determination. (1) If the UIS Director determines that 
a State has maintained its solvency effort, continuation of deferral 
will be granted, and the State will be required to timely pay the 
deferred interest payable prior to October 1 of the year with respect to 
which such determination is made.
    (2) If the UIS Director determines that a State failed to maintain 
its solvency effort, all deferred interest shall be due and payable 
prior to October 1 of the year with respect to which such determination 
is made.
    (d) Application and information. (1) The Governor of a State which 
has decided to request continuation of a previously approved deferral of 
interest payments shall apply to the Secretary of Labor no later than 
July 1 of the year for which continuation is requested. The Governor is 
required to notify the Department on or before September 1 of such 
taxable year of any action impacting upon the State's application which 
has occurred or will occur subsequent to the date of the initial 
application and on or before September 30.
    (2) In support of the application by the Governor, there shall be 
submitted for the purposes of the estimates required in paragraph (b) of 
this section documentation as specified in Sec. 606.22 (b)(1) through 
(4), (c) and (f) and bearing upon the application for continuation of 
deferral, in terms of the relevant comparison between revenue receipts 
and benefit outlays.