References: Chapter IV, ET Handbook No. 384, Second Edition, 20 CFR 614.12 and 5 U.S.C. 8521(a)(2). Instructions: State Employment Security Agencies (SESAs) shall use the attached schedule to determine Federal military wages for UCX "first claims" filed beginning with the first day of the first week which begins after April 6, 1996, pursuant to 20 CFR 614.12. SESAs will continue to use the existing schedule for UCX "first claims" filed before the effective date of the attached revised schedule. As provided by 20 CFR 614.12(d), the attached schedule shall be published as a notice in the Federal Register. Action Required: Administrators should provide the above instructions and the attached revised schedule to appropriate staff.

References: The W-P Act, as amended; Workforce Investment Act (WIA), 20 CFR 652; Training and Employment Guidance Letter (TEGL) No. 2-97 and TEGL No. 2-97, Change 1. Background: The Secretary of Labor is issuing final planning allotments for each State's share of PY 1999 funds for basic labor exchange activities. The allotments will be published in the Federal Register. Allotment Formula: These allotments (Attachment) are based on the FY 1999 appropriation of $761,735,000 and are distributed by the statutory formula described in Section 6 of the Act. Section 6(b)(4) of the Act authorizes the Secretary of Labor to reserve up to 3 percent of the total fund availability to assure that each State will have sufficient resources to maintain statewide employment service (ES) activities. The setaside for distribution through an administrative formula for this program year is $22,312,050. The 3 percent distribution is included in the total final allotment. The setaside was distributed in two steps to States whose relative share of resources declined from the previous year. In Step 1, those States with a civilian labor force (CLF) below one million and that are also below the median CLF density were held harmless at 100 percent of their prior year relative share of resources. The remainder was distributed in Step 2 in pro rata shares to all other States that lost in relative share from the prior year but did not meet the size criteria for Step 1. Ten percent of the total sums allotted to each State shall be reserved for use by the Governor to provide performance incentives for public ES offices; services for groups with special needs; and for the extra costs of exemplary models for delivering job services. The data used are Calendar Year 1998 averages of CLF and number of unemployed individuals. Differences between preliminary and final planning estimates are caused by the use of Calendar Year data as opposed to the earlier data used for preliminary planning estimates. Postage Costs: Postage costs incurred by States during the conduct of ES activities are billed directly to the Department of Labor by the U.S. Postal Service. The total planning estimate does not include $18,000,000 of the total amount available, which is withheld for the payment of the States' ES penalty mail costs.

Background: The public employment and training system is poised for a period of significant change in funding and organization. The new sorting of responsibilities between and among the federal, State and local partners contained in both the current House and Senate legislation creates challenges and promising opportunities. ETA views technology as an indispensable component in helping our delivery systems address the effects of these challenges, to exploit latent opportunities, and to accelerate the nation's movement to a world class public employment and training system. Both the President and the Vice President have stressed that technology will play a key role in improving both education and training opportunities of all Americans and reduce the cost of government. With the reality of reduced budgets, all levels of government are being called on to deliver high-quality, easily- accessible services at a lower cost to the taxpayer, to position those services closer to the customer, and to retain the flexibility to respond to dynamic conditions in our labor markets. Conference Objective: With the potential of new employment and training legislation, this particular conference provides an excellent learning opportunity for those engaged in critical workforce development activities. Specifically, JETT*CON provides ETA's State and local partners the opportunity -- to learn how technology can be used to improve the operation and delivery of workforce development services, to see, touch, and feel these technologies first-hand, to become more knowledgeable consumers of technology. In addition, the commercial marketplace, and technology vendors in particular, will have the chance to gain a better understanding of and access to the emerging public workforce development marketplace. JETT*CON will provide a forum for ongoing discussion of our collaborative system-building efforts at all levels of government, with lively and provocative demonstrations on how today's and tomorrow's technology can be used in the delivery of public employment and training programs and services. In anticipation of block grants and program consolidation requirements, ETA has structured meetings and colloquia within the conference format to promote exchanges and networking between and among all system-building partners. JETT*CON provides a unique, integrated forum where all of ETA's system-building activities can conduct essential dialogues between organizations and experts, and share effective practices and experiences. Conference Overview: JETT*CON is a combination of integrated, coordinated events: pre- conference workshops, plenary sessions that will address topics of concern to all members of the employment and training community, concurrent meetings of most of ETA's system-building activities (i.e., One-Stop Career Centers, Enterprise/Pioneers, and America's Labor Market Information System), JETT*CON technology workshops and the JETT*CON exposition program. Content for the plenary sessions and concurrent meetings is under development and will be distributed to the field as soon as possible. JETT*CON's technology workshop and exposition program has been organized around integrated thematic tracks: Internet - technology used to access and use the Internet to improve program services. Operations - technology used to support the operation, administration, and management of public employment and training programs, their money, or their customers. Access - technology used to deliver information directly to customers or to establish new pathways for accessing available information resources. Training - technology used to deliver training services directly to the customers of the public employment and training system. Labor Exchange - technology used to match job seekers with job openings and employers with qualified applicants. Quality - technology used to support continuous improvement and total quality management programs. Several activities and events have been structured around each track, including: Educational Workshops -- an interactive, hands-on learning experience which focuses on the application of technology to that "track" and provides tools to assist consumers in choosing technologies and vendors. System Showcases and Presentations -- examples of exemplary uses of technology drawn from the public employment and training system. Exhibits -- more than 70 vendors that provide technologies germane to workforce development. New Product Demonstrations -- selected exhibitors will be asked to present new and exciting products that are of benefit to the public employment and training community. In addition to these activities, ETA's electronic replacement of the outdated Dictionary of Occupational Titles, O*NET, will be showcased. The conference is being co-sponsored by the National Alliance of Business (NAB) in partnership with several of ETA's national partner organizations (i.e., Enterprise Council, the American Association of Community Colleges, American Society for Training and Development, Human Resources Development Institute (AFL-CIO), National Association of Counties, National Association of Private Industry Councils, National Association of Workforce Development Professionals, National Governors Association, National Conference of State Legislatures, Interstate Conference of Employment Security Agencies, U.S. Conference of Mayors, the National League of Cities, and the National Occupational Information Coordinating Committee). Attendance: This conference is designed for leaders, policy makers, and practitioners of States and local governments engaged in planning for or implementing One-Stop Career Centers and local learning laboratories, developing labor market information delivery systems, engaging in system-building activities, and establishing or expanding programs of continuous improvement and quality services to benefit their customers. JETT*CON is planning on 1500 participants. There is no restriction on attendance. Everyone is invited to attend. However, attendance at a few business meetings conducted by selected groups will be by invitation only. Registration: A registration form is attached to this TEIN. It is being distributed to all State JTPA Liaisons, One-Stop Liaisons, State Employment Security Administrators, and State Worker Adjustment Liaisons. These individuals will then distribute the information as needed. Please complete the form and fax or mail it to: JETT*CON Registration Center c/o National Alliance of Business 1201 New York Avenue, NW Suite 700 Washington, DC 20005 Fax: (202) 289-1303 Attention: Makeda White Conference brochures are being sent to the following groups and organizations who will distribute them as needed: Regional Administrators All JETT*CON Partners LMI Liaisons The Enterprise/Pioneers will send brochures as part of a special mailing to their members and others in the JTPA community. Copies of this TEIN will be distributed to Job Corps, the Bureau of Apprenticeship Training, School-to-Work, and National Programs. These groups will then disseminate the TEIN to their constituencies. You may also register online by bringing up the JETT*CON Homepage. The URL address is http://www.doleta.gov/media/jettcon. Complete the online registration form and Email it according to the instructions. Do not send any credit card information over the Internet. All individuals who register online will be invoiced. You will then have your choice of payment methods. Special registration instructions and a letter will be sent to individuals who had registered for JETT*CON in January, paid by personal check or credit card and did not request a refund. Housing Information: Hotel space is being held until June 5, 1996. A limited number of guest rooms are available at the government rate ($124). Please contact the hotel directly for reservations (hotel contact information is contained on the registration form). Be sure to mention JETT*CON to secure the government rate. Action: Please share this information with appropriate staff who may be interested in attending JETT*CON.

Background: Preparing today's young people for tomorrow's high-skill jobs is essential to our Nation's continuing success. For more than a decade, the JTPA Summer Youth Employment and Training Program has introduced young people to the world of work and has helped them better understand how to apply the knowledge and skills they learn in school, while paving the way for brighter, more productive futures. In recent years, the Department's Summer Challenge has urged businesses to get involved -- to provide summer jobs for teens in their communities, to provide funding for programs to help those younger teens, to serve as mentors in the schools, and so on. The Department has also urged the private sector to play a larger and more vital role in preparing young people for the world of work, recognizing that employers know best the sorts of skills they need in their future employees to remain competitive. As demonstrated in previous years, States know the importance of private sector involvement in youth efforts and have, for the last few years, responded to the Department's Challenge by initiating a variety of private sector campaigns. Today, given the reduced funding of JTPA programs, private sector participation is more important than ever. Therefore, the Department encourages you and the local areas in your State not only to continue, but to intensify efforts to engage the private sector in local summer youth job programs this year. Technical Assistance: To this end, the Department is sending to the training and employment system SummerWorks A Compendium of 1995 Private Sector Summer Youth Jobs Initiatives and School-to-Work Summer Programs, a "how-to" booklet developed by staff of the San Francisco Regional Office. The booklet is based on a series of interviews with private sector employers and employment and training practitioners active in youth initiatives in Arizona, California, Hawaii, and Nevada. ETA's Regional Offices will be distributing this booklet, along with a cover letter from Assistant Secretary Tim Barnicle, to your offices and to all SDA's in the State, in order to share successful strategies for developing private sector summer youth jobs. As additional technical assistance materials become available, they will also be provided to you. Separate Cover: SummerWorks A Compendium of 1995 Private Sector Summer Youth Jobs Initiatives and School-to-Work Summer Programs.

References: Section 3304(a)(9)(B) of the Internal Revenue Code, as amended; 20 CFR 616; ET Handbook No. 399; UIPL 28- 97, dated April 24, 1997; UIPL 15-98, dated February 12, 1998; UIPL 27-98, dated May 6, 1998; and the ICON User Guide. Background: Administration of the combined wage claim (CWC) program involves the transfer of wages, exchange of information pertaining to CWC status/disposition of transferred wages, quarterly billing of benefit charges to transferring States and the quarterly reimbursement of benefit charges between States. These administrative activities require the use of the Request for Wage Transfer (TC-IB4), the Report on Determination of CWC (TC-IB5), the Quarterly Statement of Benefits Paid to Combined Wage Claimants (TC-IB6) and the U.S. Department of Treasury's On- line Unemployment Trust Fund Accounting System (UTFAS). To increase the quality and timeliness of benefits paid under the CWC program and to create a more efficient method for handling the administrative activities, the release of ICON applications for handling CWC transactions began in 1989. ICON applications to handle the transmission of electronic TC-IB4 and TC-IB5 data were released to the States in 1989 and 1990, respectively. Currently, all States except the Virgin Islands are operational on these applications. In 1997, the U.S. Treasury expanded its UTFAS's capabilities to allow States to make quarterly IB6 reimbursements through fund transfers between States' accounts. Using the UTFAS eliminates CWC administrative costs associated with the use of checks or electronic fund transfers between banks and the potential loss of interest income to the UTF. Currently, there are forty-four States using this system for reimbursements. The TC-IB6, commonly called the quarterly bill, is the final module in automating the administrative processes between States that are necessary for the combined wage program. This module was completed and tested in 1997. National distribution was delayed because of the year 2000 considerations. However, as of late 1997, 19 States had requested and received the application code from Lockheed Martin. Therefore, after consultation with the Interstate Conference of Employment Security Agencie's Interstate Benefit (IB) Committee, the application code was released to all States with an implementation requirement of the billing cycle for the quarter ending March 31, 1999. Before and after the distribution of the TC-IB6 application, the requirements of the system were explained at sessions held at the annual meeting of interstate program and information technology staff. SESAs continue to be allocated special funding to install, interface, and maintain the ICON applications. Reminder: Some SESAs have not installed the required applica- tions to date. The time frame for issuing the first quarter (ending March 31, 1999) TC-IB6 timely, is extended until May 15, 1999. Therefore, there is still time for States to meet the implementation requirement. SESAs' failure to electronically transmit the required data will have an adverse effect on all other States as they must continue to maintain a manual system in order to handle hardcopy IB6s received from such States. Requirement for Conformity and Compliance: Section 3304(a)(9)(B) of the Federal Unemployment Tax Act requires States to participate in any combined wage claim arrangement approved by the Secretary of Labor (in consultation with the State agencies). Title 20 C.F.R. 616.13, in pertinent part, implements this arrangement by providing that: - Each State agency will cooperate with every other State agency by implementing such rules, regulations, and procedures as may be prescribed for the operation of this [combined wage] arrangement. Effective no later than May 15, 1999, electronic data communication is the prescribed procedure for handling IB6 billings by CWC Paying States. Transition Procedures: States that have not maintained an electronically accessible TC-IB5 file will not be able to create TC- IB6s that carry the key identifying the TC-IB5 used in the calculation of the charges. States receiving these records will have to manually edit the charges. However, States should not delay TC-IB6 implementation until they build TC-IB5 files. Recognizing that some States may not meet the May 15, 1999, deadline, transition procedures were discussed with the IB Committee at its February 1999 meeting. The discussion centered around the issue of whether or not States that have the ICON TC-IB6 application in place have to make a distinction between States that were operational and those that were not creating and sending electronic TC-IB6s. The decision was that States with the electronic TC- IB6 installed should create and send both an electronic and a hardcopy IB6 to each State. This will eliminate the sorting burden for the paying States that are operational on the TC-IB6. The TC- IB6 data addressed to States that are not operational by May 15, 1999, will thereafter be discarded by the HUB. Action Required: State Administrators are requested to take the necessary actions to ensure that, no later than May 15, 1999, all quarterly IB6 bills will be transmitted and received via ICON.

References. 20 CFR 632.4 and DINAP Bulletin 94-2 and 94-29. Background. The Department of Health and Human Services (DHHS) published revised poverty income guidelines in the Federal Register on March 4, 1996. The Job Training Partnership Act (JTPA) regulations at 20 CFR 632.4 provide for the use of DHHS poverty guidelines in determining economically disadvantaged persons and program eligibility. However, DHHS has definitions of "income" and "family" which are not applicable to the JTPA program. JTPA definitions can be found at 20 CFR 632.4. Action. The revised guidelines are effective from the date of this bulletin. Questions. Contact your DINAP Federal Representative at (202) 219-5511.

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Reference. DINAP Bulletins Nos. 95-03; 95-12; 95-18; and 95-20. Background. On Thursday, July 27, 1995, the President signed the 1995 rescission bill, which became Public Law 104-19. This act eliminated all new funding for JTPA title II-B programs for the summer of 1996. However, as a result of input from a wide variety of sources, Congress became convinced of the importance of the Summer Youth program and agreed to restore some $625 million in JTPA title II-B funds for the summer of 1996. Approximately $11.4 million of this total is available to those section 401 grantees who qualify for title II-B funds. Policy. As stated in DINAP Bulletin No. 95-03 (now rescinded), all carry-in limits previously issued for title II-B funds are hereby withdrawn, including limits imposed on the deobligation of II-B funds from the now-expired 99-1/B-3 grants to the new B-5 grants which (for title II-B purposes) became effective on May 15, 1995. Grantees operating Summer Youth programs during 1996 must submit a Summer Plan for DOL approval, and will be expected to report on the expenditure of Federal funds (Financial Status Report) and program outcomes (Program Status Summary), as previously instructed, by November 15, 1996. Action. Attached are individual allocation levels for those grantees eligible to receive JTPA title II-B funds for the summer of 1996. These grantees need to submit new CY 1996 title II-B planning documents as soon as possible, due to the extremely short lead time remaining for processing and funding. To facilitate this effort, the Department will require only the following documents with the 1996 Summer Plans: (1) a new Budget Information Summary (BIS), showing actual title II-B carry-in amounts from the summer of 1995 (regardless of funds source); (2) a new Program Planning Summary (PPS); (3) a new grant signature sheet (attached), with the appropriate boxes checked under the Summer Plan section; and (4) a new narrative portion, if?necessary. Grantees wishing to omit the narrative and operate essentially the same title II-B program as they operated during 1995 need only check line a. "Program substantially unchanged from CY 1995". Because the procedures accompanying DINAP Bulletin No. 95-20 are now obsolete, all grantees eligible to receive title II-B funds MUST submit the above-referenced documents, whether or not they have already submitted paperwork pursuant to Bulletin 95-20. New Summer Plans must be sent as soon as possible to the following address: U.S. Department of Labor Employment and Training Administration Division of Indian and Native American Programs Room N-4641 FPB 200 Constitution Avenue, N.W. Washington, D.C. 20210 ATTENTION: SUMMER PLANS DESK Questions. Contact your DINAP Federal Representative Team.

References: ET Handbook No. 395, Revised July, 1997. FY 1999 BAM Training Seminars for State Investigators: Three remaining sessions of approximately 30 participants each are scheduled as follows: Date Location Deadline May 18 -21, 1999 Kansas City, Missouri April 16, 1999 June 29 -July 2, 1999 Washington, D.C. May 28, 1999 August 17 -20, 1999 Buena Park, California July 9, 1999 Logistics Information: The attached sheets provide information on location, hours, hotel arrangements, and ground transportation for the upcoming training seminars. A separate sheet is provided for each seminar. State Nominees: Nominations for each session will be accepted on a first come, first served basis. Nominations should indicate the session being requested. The deadlines shown above are for notification to the Regional Office (RO).

References: Sections 501, 1402(a)(15), 3301-3310 (the Federal Unemployment Tax Act (FUTA)), 7701(a), 7871, and 7873(a)(2) of the Internal Revenue Code (IRC); 25 U.S.C. Sections 450b and 479; Revenue Rulings 56- 110, 59-354, 68-493 and 85-194; and Unemployment Insurance Program Letters (UIPLs) 29-83, 29-83, Change 1, 12-87 and 24-89. Background: It is the Department's position that the granting of reimbursement status to Indian tribes liable for the Federal unemployment tax is inconsistent with the experience rating requirements of Section 3303(a)(1), FUTA. However, some States have nevertheless granted such Indian tribes reimbursement status. Although Congressional action has been anticipated on this matter for a considerable time, it does not appear to be forthcoming. Therefore, the Department is issuing this UIPL to assure consistent treatment of tribes for experience rating purposes. This UIPL also contains a discussion concerning State jurisdiction over the tribes. Unless greater specificity is required, this UIPL will use the term "tribe" to describe the Indian tribe, its tribal government as well as other tribal governmental entities and tribal business enterprises. Section 7701(a)(40)(A) of the IRC defines the term "Indian tribal government" to mean "the governing body of any tribe, band, community, village, or group of Indians, or (if applicable) Alaska natives, which is determined by the Secretary [of the Treasury], after consultation with the Secretary of the Interior, to exercise governmental functions." Tribal governments, usually called "tribal councils," frequently operate business enterprises. "Tribe" is not defined in the IRC. For purposes of the Indian Self-Determination and Education Assistance Act, a tribe is defined as "any Indian tribe, band, nation or other organized group or community . . . which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians." 25 U.S.C. 450b(e). For purposes of the Indian Reorganization Act, a "tribe" refers to "any Indian tribe, organized band, pueblo, or Indians residing on one reservation." 25 U.S.C. 479. Federal Law Requirements: Section 3301, FUTA, imposes an excise tax on every employer (as defined in Section 3306(a)(1), FUTA) with "respect to having individuals in his employ . . . . " To encourage States to cover these services, Section 3302, FUTA, provides for a "normal" and an "additional" credit against this tax. Also, as described below, FUTA requires States to cover services performed for certain entities which are not subject to the FUTA tax and to offer such entities a reimbursement option. As a condition of receiving the additional credit, Section 3303(a)(1), FUTA, requires that State law provide that "no reduced rate of contributions . . . is permitted to a person (or group of persons) . . . except on the basis of his (or their) experience with respect to unemployment or other factors bearing a direct relation to unemployment risk." (Emphasis added.) Therefore, except as explained below, if an entity is a "person," that entity may be assigned a reduced rate only on the basis of its experience or other factors bearing a direct relation to unemployment risk (hereafter "experience"). If a "person" is assigned a rate that is not based on experience, the State's assignment of rates will conflict with Federal law requirements and all employers in the State will lose the additional credit against the FUTA tax. To determine if an entity is a "person," States may rely on the entity's FUTA tax status. Section 3306(a)(1), FUTA, defines the term "employer" as, in part, "any person . . . ." Only "employers" are liable for the FUTA tax (Section 3301, FUTA). Thus, any entity determined by the IRS to be an employer subject to and liable for the FUTA tax is a "person" which must be experience rated. However, since the term "person" is broader than the term "employer," it is possible for an entity to be a "person" even though it is not liable for the FUTA tax. One way this will happen is if all the services performed for a "person" are excluded from the definition of "employment" in Section 3306, FUTA. Two of these exclusions are described in paragraphs (7) and (8) of Section 3306(c): (7) service performed in the employ of a State, or any political subdivision thereof, or any instrumentality of any one or more of the foregoing which is wholly owned by one or more States or political subdivisions; and any service performed in the employ of any instrumentality of one or more States or political subdivisions to the extent that the instrumentality is, with respect to such service, immune under the Constitution of the United States from the tax imposed by section 3301; (8) service performed in the employ of a religious, charitable, educational, or other organization described in section 501(c)(3) which is exempt from income tax under section 501(a). Since these State and local governmental entities and nonprofit organizations are not subject to the FUTA tax, the principal incentive for requiring State unemployment compensation (UC) coverage - the receipt of the tax credits against the FUTA tax for the individual employer - is absent. Sections 3304(a)(6) and 3309, FUTA, therefore, require, as a condition for all employers in a State to receive credit against the FUTA tax, that the State cover these services. These sections further require that States extend the option to make "payments (in lieu of contributions)," commonly called reimbursements, based on these services. The only way a "person" can qualify for reimbursing status under a State law without conflicting with Federal law is by meeting one of these two exclusions. Providing reimbursement status is viewed by the Department as assigning a zero rate to the "person" because no prospective liability is created. (Similarly, assigning no rate is viewed as assigning a zero rate.) Unless the "person" qualified for reimbursement status as discussed in the preceding paragraph, a conflict with Section 3303(a)(1), FUTA, would exist since the zero rate would not be based on experience. In addition, such a zero rate would not be based on the three years of experience immediately preceding the computation date and "persons" would not receive rates based on the same factors over the same period of time. (A discussion of these experience rating requirements is found in UIPL 29-83 and its Change 1.) Status of Tribes under Federal Law: It is well established that the IRS and the courts consider tribes to be "persons" for Federal tax purposes. The term "person" is defined in Section 7701(a)(1), IRC, "to mean and include an individual, a trust, estate, partnership, association, company or corporation." IRS Revenue Ruling 85-194 addressed whether an Indian tribal government was a "person." That ruling held that the definition of "person" in Section 7701(a)(1), IRC, "is sufficiently broad to include a governmental body." See Ohio v. Helvering, 292 U.S. 360 (1934). Therefore, the tribal government was a "person." The fact that tribes may perform governmental functions does not, therefore, form a basis for excepting them from the definition of "person." In fact, in cases where they are subject to the FUTA tax, they are plainly "persons" under Federal law since only "persons" are subject to this tax. In Revenue Ruling 56-110, the IRS determined that a business enterprise operated by a tribe is not an instrumentality wholly- owned by the United States and, therefore, is liable for the FUTA tax. Revenue Ruling 59-354 held that a tribal council is liable for FUTA taxes for employees of the council and employees of tribal council business enterprises. Revenue Ruling 68-493 held that services performed by an Indian employee are not excepted from the FUTA definition of employment merely because the Indian is a ward of the United States. Courts have upheld the IRS position that tribes are subject to FUTA. See Matter of Cabazon Indian Casino, 57 B.R. 398 (Bankr. 9th Cir. 1986), and Washoe Tribes v. United States, 79-2 U.S. Tax Cas. (CCH) P9718. Also, Confederated Tribes of Warm Springs Reservation v. Kurtz, 691 F.2d 878 (9th Cir. 1982), established that tribes are liable for Federal excise taxes. Under Section 3301, FUTA, the FUTA tax is specifically defined as an excise tax. The FUTA liability of tribes is confirmed by the fact that two special provisions were deemed necessary to exempt certain tribal services from the FUTA tax. First, an amnesty provision was created in 1986 to exempt service in the employ of "a qualified Indian entity" from the FUTA tax for a specific period during which the entity (that is, the tribe) was not covered by a State UC program. See UIPL 12-87. Second, Sections 1402(a)(15) and 7873(a)(2) were added to the IRC in 1988 to exclude from the FUTA tax services "performed in a fishing rights-related activity of an Indian tribe by a member of such tribe for another member of such tribe or for a qualified Indian entity." See UIPL 24-89. Even though tribes perform governmental functions, this does not mean that a tribe may be treated as a governmental entity for FUTA purposes. In fact, in Section 7871, IRC, Congress has clearly delineated those situations where a tribe may be treated as a State for Federal tax purposes. These purposes do not include the FUTA tax. The FUTA governmental exclusion in Section 3306(c)(7) applies only to State governments or "political subdivisions thereof." In the attached correspondence, the IRS has confirmed that, even where tribes are considered to be political subdivisions or agencies of a State under State law, the tribes remain subject to the FUTA tax in the same way as other private employers. (The IRS further stated that tribes would likely not be allowed a credit against the FUTA tax for any reimbursements made to a State's unemployment fund.) A State may, for UC purposes, treat a tribe as a Section 3306(c)(7), FUTA, entity only if the tribe is in fact such an entity under Federal law. Merely designating a tribe as a governmental entity under State UC law is not sufficient; the tribe must be a Section 3306(c)(7) entity in all respects. The term "political subdivision" is a Federal law term; it is not affected by the State's use of that term. In sum, if a tribe is subject to the FUTA tax, it is a "person." This tribe is not a governmental entity described in Section 3306(c)(7) since such entities are exempt from the FUTA tax. The State may not give this tribe reimbursable status and may assign it a reduced rate only on the basis of its experience. Status of Tribes under State Law - Jurisdictional Issues: The provisions of FUTA relating to taxable services do not require a State to cover these services for UC purposes. Instead, coverage is encouraged by granting employers credit against the FUTA tax for contributions paid on services covered under State law. Since States have limited jurisdictional rights over tribes or activities on reservations, State UC coverage has not always been extended to the tribes. In some States, the continuation of coverage for tribal services is conditioned on the tribe's payment of its UC benefit costs. If tribes are not covered under State law, then they will not be eligible for any credit against the FUTA tax. A leading State court decision on this jurisdictional matter is Employment Security Department v. the Cheyenne River Sioux Tribe, 119 N.W.2d 285 (S.D. 1963). In this case, South Dakota sought to collect from a tribe contributions owed to the State's UC fund. The Cheyenne Court noted that the tribal authority in certain areas results in the existence of three forms of government within the geographical confines of the State: the United States of America, the State itself and Indian tribes. In concluding that the Cheyenne River Sioux Tribe was immune from suit, the Court decided that "unless Congress enacts a statute authorizing, or consenting to, actions to enforce the claimed liability, the courts of this state have no jurisdiction of the Tribe in this civil action." The United States Supreme Court has confirmed the States' limited jurisdiction over tribes. In Bryan v. Itasca County, 426 U.S. 373, 96 S.Ct. 2102 (1976), the Court held that States may not impose a tax, in this case a personal property tax, on Indians living on reservations without the consent of Congress. In White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 143, 100 S.Ct. 2578, 2583 (1980), the Court held that States could not impose taxes on a non- tribal company operating on a reservation. The White Mountain opinion provided a useful summary concerning the status of tribes: The status of the tribes has been described as "'an anomalous one and of complex character,'" for despite their partial assimilation into American culture, the tribes have retained "'a semi- independent position . . . not as States, not as nations, not as possessed of the full attributes of sovereignty, but as a separate people, with the power of regulating their internal and social relations, and thus far not brought under the laws of the Union or the State within whose limits they resided.'" [Citations omitted.] At least one State mandates UC coverage of tribes on the basis that, through Section 3305(d), FUTA, Congress has provided States with the authority to cover services on lands held in trust for the tribes by the Federal government. That section provides that "[n]o person shall be relieved from compliance with a State unemployment compensation law on the ground that services were performed on land or premises owned, held, or possessed by the United States, and any State shall have full jurisdiction and power to enforce the provisions of such law to the same extent and with the same effect as though such place were not owned held, or possessed by the United States." The Department has not, however, taken a position on this. In short, States have limited jurisdictional authority to impose or collect a State UC tax on tribes. However, unless this tax is imposed by the State and paid by the tribes, the tribes receive no credit against the FUTA tax for which they are liable. Summary: Although tribes may perform governmental activities, this does not mean that they are not liable for the FUTA tax. In fact, both the IRS and the courts have concluded that tribes are "persons" liable for the tax. For employers in a State to receive the additional credit, the State may assign reduced rates to any "person" only on the basis of experience. If a State does not assign a rate based on experience to a FUTA liable employer, this experience requirement is not met. Only entities excluded from the FUTA tax under Sections 3306(c)(7) and (8) qualify for reimbursement status. As FUTA liable tribes are not among those entities qualifying for the reimbursement option, they must be assigned a reduced rate only on the basis of experience. Action Required: State agencies should assure that, for experience rating purposes, tribes are treated consistent with the Federal law requirements described herein.