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H.R.6653 - To amend the Internal Revenue Code of 1986 to provide standards for determining employment status, and for other purposes.
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SECTION 1. SHORT TITLE.
SEC. 2. FINDINGS.
(6) It is in the best interests of taxpayers, the Federal Government and the business community to have fair and objective rules for determining who is an independent contractor and who is an employee.CommentsClose CommentsPermalink
SEC. 3. STANDARDS FOR DETERMINING EMPLOYMENT STATUS.
(a) In General- Chapter 25 of the Internal Revenue Code of 1986 (general provisions relating to employment taxes) is amended by adding after section 3510 the following new sections:CommentsClose CommentsPermalink
‘SEC. 3511. CONTROVERSIES INVOLVING WHETHER INDIVIDUALS ARE EMPLOYEES FOR PURPOSES OF THE EMPLOYMENT TAXES.
‘(B) in the case of periods after December 31, 1978, all returns (including information returns) required to be filed by the taxpayer with respect to such individual for such period are filed on a basis consistent with the taxpayer’s treatment of such individual as not being an employee,CommentsClose CommentsPermalink
then, for purposes of applying such taxes for such period with respect to the taxpayer, the individual shall be deemed not to be an employee unless the taxpayer had no reasonable basis for not treating such individual as an employee.CommentsClose CommentsPermalink
‘(2) STATUTORY STANDARDS PROVIDING ONE METHOD OF SATISFYING THE REQUIREMENTS OF PARAGRAPH (1)- For purposes of paragraph (1), a taxpayer shall in any case be treated as having a reasonable basis for not treating an individual as an employee for a period if the taxpayer’s treatment of such individual for such period was in reasonable reliance on any of the following--CommentsClose CommentsPermalink
‘(B) a past Internal Revenue Service audit of the taxpayer in which there was no assessment attributable to the treatment (for employment tax purposes) of the individuals holding positions substantially similar to the position held by this individual, orCommentsClose CommentsPermalink
‘(3) CONSISTENCY REQUIRED IN THE CASE OF PRIOR TAX TREATMENT- Paragraph (1) shall not apply with respect to the treatment of any individual for employment tax purposes for any period ending after December 31, 2012, if the taxpayer (or a predecessor) has treated any individual holding a substantially similar position as an employee for purposes of the employment taxes for any period beginning after December 31, 2011.CommentsClose CommentsPermalink
‘(4) REFUND OR CREDIT OF OVERPAYMENT- If refund or credit of any overpayment of an employment tax resulting from the application of paragraph (1) is not barred on the date of the enactment of this section by any law or rule of law, the period for filing a claim for refund or credit of such overpayment (to the extent attributable to the application of paragraph (1)) shall not expire before the date 1 year after the date of the enactment of this section.CommentsClose CommentsPermalink
‘(b) Prohibition Against Regulations and Rulings on Employment Status- Except for purposes of providing Revenue Rulings with respect to section 3512, no regulation or Revenue Ruling shall be published on or after the date of the enactment of this section by the Department of the Treasury (including the Internal Revenue Service) with respect to the employment status of any individual for purposes of the employment taxes.CommentsClose CommentsPermalink
‘(2) EMPLOYMENT STATUS- The term ‘employment status’ means the status of an individual, under the usual common law rules applicable in determining the employer-employee relationship, as an employee or as an independent contractor (or other individual who is not an employee).CommentsClose CommentsPermalink
‘(d) Exception- This section shall not apply in the case of an individual who, pursuant to an arrangement between the taxpayer and another person, provides services for such other person as an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work.CommentsClose CommentsPermalink
‘(1) NOTICE OF AVAILABILITY OF SECTION- An officer or employee of the Internal Revenue Service shall, before or at the commencement of any audit inquiry relating to the employment status of one or more individuals who perform services for the taxpayer, provide the taxpayer with a written notice of the provisions of this section.CommentsClose CommentsPermalink
‘(A) a taxpayer may not rely on an audit commenced after December 31, 1996, for purposes of subparagraph (B) thereof unless such audit included an examination for employment tax purposes of whether the individual involved (or any individual holding a position substantially similar to the position held by the individual involved) should be treated as an employee of the taxpayer,CommentsClose CommentsPermalink
‘(B) in no event shall the significant segment requirement of subparagraph (C) thereof be construed to require a reasonable showing of the practice of more than 25 percent of the industry (determined by not taking into account the taxpayer), andCommentsClose CommentsPermalink
‘(3) AVAILABILITY OF SAFE HARBORS- Nothing in this section shall be construed to provide that subsection (a) only applies where the individual involved is otherwise an employee of the taxpayer.CommentsClose CommentsPermalink
‘(B) EXCEPTION FOR OTHER REASONABLE BASIS- In the case of any issue involving whether the taxpayer had a reasonable basis not to treat an individual as an employee for purposes of this section, subparagraph (A) shall only apply for purposes of determining whether the taxpayer meets the requirements of subparagraph (A), (B), or (C) of subsection (a)(2).CommentsClose CommentsPermalink
‘(A) an individual would (but for the treatment referred to in subparagraph (B)) be deemed not to be an employee of the taxpayer under subsection (a) for any prior period, andCommentsClose CommentsPermalink
‘(6) SUBSTANTIALLY SIMILAR POSITION- For purposes of this section, the determination as to whether an individual holds a position substantially similar to a position held by another individual shall include consideration of the relationship between the taxpayer and such individuals.CommentsClose CommentsPermalink
‘SEC. 3512. SAFE HARBOR STANDARDS FOR DETERMINING EMPLOYMENT STATUS.
‘(a) General Rule- For purposes of this title, if the requirements of subsection (c) are met with respect to any service performed by any service provider, then with respect to such service--CommentsClose CommentsPermalink
‘(A) incurs significant financial responsibility for providing and maintaining the necessary equipment and facilities to perform the work outlined in their qualified agreement, andCommentsClose CommentsPermalink
‘(ii) risks income fluctuations because the remuneration with respect to such service is directly related to sales or other output rather than solely to the number of hours actually worked or expenses incurred.CommentsClose CommentsPermalink
‘(A) is compensated upon factors related to the work performed, such as a percentage of revenue or scheduled rates, and not solely on the basis of hours or time expended, andCommentsClose CommentsPermalink
‘(B) substantially controls the means and manner of performing the services, in conformance with regulatory requirements, the specifications of the service recipient or payor and any additional requirements specified in the qualified agreement.CommentsClose CommentsPermalink
‘(3) PAYOR- The term ‘payor’ means the person or entity that pays the service provider for the performance of such service in the event that the service recipients do not pay the service provider.CommentsClose CommentsPermalink
‘(5) QUALIFIED AGREEMENT- The term ‘qualified agreement’ means a written contract between a service provider and the service recipient for whom the services are performed or the payor that provides that the service provider--CommentsClose CommentsPermalink
(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this Act shall take effect beginning on the first day of the first calendar year beginning after the date of enactment of this Act.CommentsClose CommentsPermalink