[Congressional Record Volume 161, Number 118 (Sunday, July 26, 2015)]
[Senate]
[Pages S5878-S5880]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 2503. Mr. BROWN submitted an amendment intended to be proposed to
amendment SA 2266 proposed by Mr. McConnell to the bill H.R. 22, to
amend the Internal Revenue Code of 1986 to exempt employees with health
coverage under TRICARE or the Veterans Administration from being taken
into account for purposes of determining the employers to which the
employer mandate applies under the Patient Protection and Affordable
Care Act; which was ordered to lie on the table; as follows:
On page 17, strike lines 5 through 10 and insert the
following:
(A) $750,000,000 for fiscal year 2016;
(B) $800,000,000 for fiscal year 2017;
(C) $850,000,000 for fiscal year 2018;
(D) $900,000,000 for fiscal year 2019;
(E) $900,000,000, for fiscal year 2020; and
(F) $900,000,000 for for fiscal year 2021.
Beginning on page 899, strike line 23 and all that follows
through page 900, line 2, and insert the following:
``(f) Funding.--
``(1) In general.--On October 1, 2017, and on each October
1 thereafter through October 1, 2022, out of any funds in the
Treasury not otherwise appropriated, the Secretary of the
Treasury shall transfer to the Secretary to carry out this
section $400,000,000, to remain available until expended.
On page 943, between lines 6 and 7 insert the following:
SEC. 52109. FAIR PLAYING FIELD ACT.
(a) Short Title.--This section may be cited as the ``Fair
Playing Field Act of 2015''.
(b) Findings.--Congress makes the following findings:
(1) In 1978, Congress was concerned that lack of clarity as
to the proper classification of some workers, increased IRS
enforcement activity, and retroactive application by IRS of
interpretations that were arguably new had caused hardships
for some small businesses and other taxpayers and confusion
as to the applicable rules.
(2) To allow time to develop a comprehensive approach to
the problem, Congress enacted section 530 of the Revenue Act
of 1978 as an interim measure protecting taxpayers from
liability for misclassification if the taxpayer has a
reasonable basis for classifying a worker as an independent
contractor and meets certain other conditions. In addition,
the Act prohibited the Secretary of the Treasury from
publishing regulations or revenue rulings on workers'
employment tax status pending the expected near-term
enactment of clarifying legislation.
(3) During the ensuing 33 years, Congress made section 530
of the Revenue Act of 1978 permanent; however, changes in
working relationships and the continued prohibition on new
guidance have increased the uncertainty as to the proper
classification of workers.
(4) Many workers are properly classified as independent
contractors. In other instances, workers who are employees
are being treated as independent contractors. Such
misclassification for tax purposes contributes to inequities
in the competitive positions of businesses and to the Federal
and State tax gap, and may also result in misclassification
for other purposes, such as denial of unemployment benefits,
workplace health and safety protections, and retirement or
other benefits or protections available to employees.
(5) Workers, businesses, and other taxpayers will benefit
from clear guidance regarding employment tax status. In the
interest of fairness and in view of many service recipients'
reliance on current section 530, such guidance should apply
only prospectively.
(c) Purposes.--The purposes of this section are to permit
the Secretary of the Treasury to provide guidance allowing
workers and businesses to clearly understand the proper
Federal tax classification of workers and to provide relief
allowing an orderly transition to new rules designed to
increase certainty and uniformity of treatment.
(d) Authority to Issue Guidance Clarifying Employment
Status for Purposes of Employment Taxes.--Chapter 25 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 3512. AUTHORITY TO ISSUE GUIDANCE CLARIFYING
EMPLOYMENT STATUS.
``(a) In General.--The Secretary shall issue such
regulations or other guidance as the Secretary determines to
be necessary or appropriate to clarify the proper employment
status of individuals for purposes of any tax imposed by this
subtitle.
``(b) Prohibition on Retroactive Assessments.--
``(1) In general.--Except as provided in paragraph (2),
if--
``(A) for purposes of any tax imposed by this subtitle, the
taxpayer did not treat an individual as an employee for any
period before the reclassification date with respect to such
individual, and
``(B) in the case of periods after December 31, 1978, and
before such reclassification date, all Federal tax 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,
then, for purposes of applying such taxes for such period
before such reclassification date 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.
``(2) Professional services.--
``(A) In general.--In the case of an individual who
performs professional services, if--
``(i) for purposes of any tax imposed by this subtitle, the
taxpayer did not treat the individual as an employee for any
period, and
``(ii) in the case of periods after December 31, 1978, all
Federal tax 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,
then, for purposes of applying such taxes for such period
with respect to the taxpayer, the individual shall be deemed
not be an employee unless the taxpayer had no reasonable
basis for not treating such individual as an employee. For
purposes of this subparagraph, professional services means
services performed in the fields of health, law, engineering,
architecture, accounting, actuarial science, consulting, or
financial services.
``(B) Application to full-time life insurance salesmen.--
For purposes of this subtitle (with the exception of chapter
21), an individual shall not excluded from the application of
subparagraph (A) due solely to treatment of such individual
by the taxpayer as an employee, including for purposes of tax
returns, to the extent required under section 3121(d)(3)(B).
``(3) Statutory standards providing one method of
satisfying the requirements of paragraphs (1) and (2).--For
purposes of paragraphs (1) and (2), 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:
``(A) Judicial precedent, published rulings, technical
advice with respect to the taxpayer, or a letter ruling to
the taxpayer.
``(B) A past Internal Revenue Service audit of the taxpayer
in which there was no assessment attributable to the
treatment (for purposes of any tax imposed by this subtitle)
of the individuals holding positions substantially similar to
the position held by such individual.
``(C) Long-standing recognized practice of a significant
segment of the industry in which such individual was engaged.
``(4) Consistency required in the case of prior tax
treatment.--Paragraph (1) shall not apply with respect to the
treatment of any individual (hereafter in this paragraph
referred to as the reclassified individual) for purposes of
any tax imposed by this subtitle for any period ending after
December 31,
[[Page S5879]]
1978, if the taxpayer (or a predecessor) has treated any
individual holding a substantially similar position as an
employee for purposes of any tax imposed by this subtitle for
any period beginning after December 31, 1977, and ending
before the reclassification date with respect to such
reclassified individual.
``(c) Definitions.--For purposes of this section--
``(1) Reclassification date.--
``(A) In general.--The term `reclassification date' means,
with respect to any individual, the earlier of--
``(i) the first day of the first calendar quarter beginning
more than 180 days after the date of an employee
classification determination with respect to such individual,
or
``(ii) the effective date of the first applicable final
regulation issued by the Secretary under subsection (a) with
respect to such individual (or, if later, the first day of
the first calendar quarter beginning more than 180 days after
such regulation is issued).
``(B) Employee classification determination.--The term
`employee classification determination' means, with respect
to any individual, a determination by the Secretary, in
connection with an audit of the taxpayer which is described
in section 7436 and which commences after the date which is 1
year after the date of the enactment of this section, that a
class of individuals holding positions with such taxpayer
which are substantially similar to the position held by such
individual are employees.
``(C) First applicable final regulation.--The term `first
applicable final regulation' means, with respect to any
individual, the first final regulation (or other guidance of
general applicability) which sets forth the factors for
determining the employment status of a class of individuals
holding positions substantially similar to the position held
by such individual.
``(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).
``(d) Continuation of Certain Special Rules.--
``(1) Exception for certain skilled workers.--Subsection
(b) 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.
``(2) 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.
``(3) Rules relating to statutory standards.--For purposes
of subsection (b)(3)--
``(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 purposes of any
tax imposed by this subtitle 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,
``(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), and
``(C) in applying the long-standing recognized practice
requirement of subparagraph (C) thereof--
``(i) such requirement shall not be construed as requiring
the practice to have continued for more than 10 years, and
``(ii) a practice shall not fail to be treated as long-
standing merely because such practice began after 1978.
``(4) Availability of safe harbors.--Nothing in this
section shall be construed to provide that subsection (b)
only applies where the individual involved is otherwise an
employee of the taxpayer.
``(5) Burden of proof.--
``(A) In general.--If--
``(i) a taxpayer establishes a prima facie case that it was
reasonable not to treat an individual as an employee for
purposes of subsection (b), and
``(ii) the taxpayer has fully cooperated with reasonable
requests from the Secretary,
then the burden of proof with respect to such treatment shall
be on the Secretary.
``(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 subsection (b), subparagraph (A) shall only apply for
purposes of determining whether the taxpayer meets the
requirements of subparagraph (A), (B), or (C) of subsection
(b)(3).
``(6) Preservation of prior period safe harbor.--If--
``(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 (b) for any prior period, and
``(B) such individual is treated by the taxpayer as an
employee for purposes of the taxes imposed by this subtitle
for any subsequent period,
then, for purposes of applying such taxes for such prior
period with respect to the taxpayer, the individual shall be
deemed not to be an employee.
``(7) Substantially similar position.--For purposes of
subsection (b) and this subsection, 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.
``(8) Treatment of test room supervisors and proctors who
assist in the administration of college entrance and
placement exams.--
``(A) In general.--In the case of an individual described
in subparagraph (B) who is providing services as a test
proctor or room supervisor by assisting in the administration
of college entrance or placement examinations, subsection (b)
shall be applied to such services performed after December
31, 2006 (and remuneration paid for such services) without
regard to paragraph (4) thereof.
``(B) Applicability.--An individual is described in this
subparagraph if the individual--
``(i) is providing the services described in subsection (b)
to an organization described in section 501(c) and exempt
from tax under section 501(a), and
``(ii) is not otherwise treated as an employee of such
organization for purposes of this subtitle.
``(9) Treatment of securities broker dealers.--In
determining for purposes of this title whether a registered
representative of a securities broker-dealer is an employee
(as defined in section 3121(d)), no weight shall be given to
instructions from the service recipient which are imposed
only in compliance with investor protection standards imposed
by the Federal Government, any State government, or a
governing body pursuant to a delegation by a Federal or State
agency.
``(e) Statements to Independent Contractors.--
``(1) In general.--Each person who contracts for the
services of an independent contractor on a regular and
ongoing basis, within the scope of such person's trade or
business, shall provide a written statement to such
independent contractor notifying such independent contractor
of the Federal tax obligations of an independent contractor,
the labor and employment law protections that do not apply to
independent contractors, and the right of such independent
contractor to seek a status determination from the Internal
Revenue Service.
``(2) Independent contractor.--For purposes of this
subsection, the term `independent contractor' means any
individual who is not treated as an employee by the person
receiving the services referred to in paragraph (1).
``(3) Timing of statement.--Except as otherwise provided by
the Secretary, the statement required under paragraph (1)
shall be provided within a reasonable period before or after
entering into the arrangement for services referred to in
paragraph (1).
``(4) Development of model statement.--The Secretary shall
develop model materials for providing the statement required
under paragraph (1).''.
(e) Reduced Penalty Not Applicable in Cases of
Noncompliance With Guidance Without Reasonable Basis.--
Subsection (c) of section 3509 of the Internal Revenue Code
of 1986 is amended--
(1) by striking ``if such liability'' and inserting ``if--
``(1) such liability'', and
(2) by striking the period at the end and inserting ``, or
``(2) such liability relates to an individual who is
treated as an employee under regulations or other guidance
issued by the Secretary under section 3512(a) and the
taxpayer lacks a reasonable basis for treating the individual
as other than an employee.
In the case of a taxpayer which has received a final written
determination from the Internal Revenue Service holding that
the individual referred to in paragraph (2) (or another
individual who holds a position with the taxpayer
substantially similar to the position held by such
individual) is an employee, such taxpayer shall be treated
for purposes of paragraph (2) as lacking a reasonable basis
for treating such individual as other than an employee with
respect to periods beginning on and after the first day of
the first calendar quarter beginning more than 180 days after
the date of such written determination unless the taxpayer
establishes by clear and convincing evidence that the
taxpayer has a reasonable basis for such treatment.''.
(f) Conforming Amendments.--
(1) Paragraph (2) of section 6724(d) of the Internal
Revenue Code of 1986 is amended by striking ``or'' at the end
of subparagraph (GG), by striking the period at the end of
subparagraph (HH) and inserting ``, or'', and by inserting
after subparagraph (HH) the following new subparagraph:
``(II) section 3512(e) (relating to statements to
independent contractors).''.
(2) Paragraph (2) of section 7436(a) of such Code is
amended by striking ``subsection (a) of section 530 of the
Revenue Act of 1978'' and inserting ``section 3512(b)''.
(3) The table of sections for chapter 25 of such Code is
amended by adding at the end the following new item:
[[Page S5880]]
``Sec. 3512. Authority to issue guidance clarifying employment
status.''.
(g) Termination of Section 530 of the Revenue Act of
1978.--The Revenue Act of 1978 is amended by striking section
530.
(h) Reports on Worker Misclassification.--Beginning with
the first fiscal year beginning after the date the first
regulation or other guidance is issued for public comment
under section 3512(a) of the Internal Revenue Code of 1986
(as added by this section), the Commissioner of the Internal
Revenue Service shall issue the following reports:
(1) A report each fiscal year on worker classification
which shall include the total number of examinations of
employers initiated because of suspected worker
classification issues, the total number of examinations that
included determinations on worker classification issues, the
amount of additional tax liabilities associated with worker
classification enforcement actions, the number of workers
reclassified as a result of these actions, the number of
requests for Determination of Worker Status (Form SS-8), and
technical guidance on how to understand the data provided in
the report.
(2) A report each fiscal year in which new statistically
valid data is compiled and interpreted on worker
classification, prepared on the basis of information gathered
during an Employment Tax Study conducted by the National
Research Program (NRP) of the Internal Revenue Service. Such
report shall provide statistical estimates of the number of
employers misclassifying workers, the number of workers
misclassified, the industries involved, data interpretations
and conclusions, and a description of the impact of improper
worker classification on the employment tax gap.
(i) Termination of Section 921 of the Taxpayer Relief Act
of 1997.--The Taxpayer Relief Act of 1997 is amended by
striking section 921.
(j) Effective Dates.--
(1) Delayed effective date of regulations and guidance.--
Any regulation or other guidance issued under section 3512(a)
of the Internal Revenue Code of 1986, as added by this
section, shall not apply to services rendered before the date
which is 1 year after the date of the enactment of this Act.
(2) Authority to issue regulations and guidance
immediately.--So much of the amendment made by subsection (g)
as relates to subsection (b) of section 530 of the Revenue
Act of 1978 shall take effect on the date of the enactment of
this Act.
(3) Delayed termination of remainder of section 530 of the
revenue act of 1978.--Except as provided in paragraph (2),
the amendment made by subsection (g) shall apply to services
rendered on or after the date which is 1 year after the date
of the enactment of this Act.
(4) Statements to independent contractors.--Subsection (e)
of section 3512 of the Internal Revenue Code of 1986, as
added by this section, and the amendments made by subsection
(f)(1) of this section shall apply to arrangements for
services entered into after December 31, 2015.
(5) Application of reduced penalty.--The amendments made by
subsection (e) shall apply to any calendar year beginning
after the date of the enactment of this Act.
______