House Bill Aims to Clarify Independent Contractor Status
Image: FMCSA
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Image: FMCSA
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A bill newly proposed in the House would amend the Internal Revenue Code of1986 to change the classification of employers and employees.
“Currently, it is difficult and overly complicated for businesses to use independent contractors, which limits companies’ growth and individuals’ work,” said Rep. Erik Paulsen (R-MN), who introduced H.R. 3396 on July 25.
He added that this legislation “provides clarity and guidance for businesses so they know they are properly classifying independent contractors without fear of IRS penalties.”
Paulsen noted that he sees his bill as part and parcel of “the larger tax reform effort” that GOP leaders have promised to undertake before this year is out.
H.R. 3396 has been referred to the Ways and Means Committee. The text of the bill has yet to be released, but the Customized Logistics and Delivery Association, a proponent of the measure, said the legislation would “provide standards for determining a worker’s employment status.” It would do so by putting forth a two-part test that “establishes a formal definition of who is an independent contractor and creates Safe Harbor provisions of the Tax Code” that help to define the relationship between an independent contractor and the service recipient and/or payor, said CLDA.
“This bill provides much-needed clarity and guidance for businesses that partner with independent contractors to provide the flexibility of their workforce they need to meet customer needs,” said John Benko, CLDA president. He noted that in a recent survey, over 89% of CLDA members said that their ability to use independent contractors was important to their business success.
“Independent contractors are the backbone of our industry,” Benko added, “allowing us to be responsive and flexible enough to meet changing customer demands. This bill brings clarity and transparency to the definition of an independent contractor, enabling all industries that depend on them …Read the rest of this story
