Protect small businesses from unemployment insurance premium increases by reason of unrepaid State advances.

Section 3302(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

Paragraph (2) shall not apply with respect to any specified small business.

For purposes of this paragraph, the term specified small business means any taxpayer if such taxpayer employs fewer than 500 employees as of the close of the third quarter of the calendar year immediately preceding the second consecutive January 1 referred to in paragraph (2)(A)(i).

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.