,i  #aacth ,,congress  #b;d ,session    
,h4 ,r4 #dejc  ,,in ,,the ,,house ,,of  
,,representatives  ,april #bh1 #bjad    
,mr4 ,mc,dermott introduced the         
following bill2 which was referred to   
the ,committee on ,ways and ,means  ,a  
,,bill  ,to amend the ,internal ,revenue
 ,code of #aihf to permit the ,secretary
 of the ,treasury to issue prospective  
guidance clarifying the employment      
status of individuals for purposes of   
employment taxes and to prevent         
retroactive assessments with respect to 
such clarifications4  #a4 ,short title2 
findings2 purposes  7a7 ,short title    
,this ,act may be cited as the ,fair    
,playing ,field ,act of #bjad4  7b7     
,findings ,congress makes the following 
findings3  7#a7 ,in #aigh1 ,congress was
 concerned that lack of clarity as to   
the proper classification of some       
workers1 increased ,,irs enforcement    
activity1 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 rules4  7#b7 ,to allow time  
to develop a comprehensive approach to  
the problem1 ,congress enacted section  
#ecj of the ,revenue ,act of #aigh 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      
conditions4 ,in addition1 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       
legislation4  7#c7 ,during the ensuing  
#cc years1 ,congress made section #ecj  
of the ,revenue ,act of #aigh permanent1
 however1 changes in working            
relationships and the continued         
prohibition on new guidance have        
increased the uncertainty as to the     
proper classification of workers4  7#d7 

,many workers are properly classified as
 independent contractors4 ,in other     
instances1 workers who are employees are
 being treated as independent           
contractors4 ,such misclassification for
 tax purposes contributes to inequities 
in the competitive positions of         
businesses and to the ,federal and      
,state tax gap1 and may also result in  
misclassification for other purposes1   
such as denial of unemployment benefits1
 workplace health and safety            
protections1 and retirement or other    
benefits or protections available to    
employees4  7#e7 ,workers1 businesses1  
and other taxpayers will benefit from   
clear guidance regarding employment tax 
status4 ,in the interest of fairness and
 in view of many service recipients'    
reliance on current section #ecj1 such  
guidance should apply only              
prospectively4  7c7 ,purposes ,the      
purposes of this ,act 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
 treatment4  #b4 ,authority to issue    
guidance clarifying employment status   
for purposes of employment taxes  7a7   
,in general ,chapter #be of the         
,internal ,revenue ,code of #aihf is    
amended by adding at the end the        
following new section3  #ceaa4          
,authority to issue guidance clarifying 
employment status  7a7 ,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     
subtitle4  7b7 ,prohibition on          
retroactive assessments  7#a7 ,in       
general ,if--  7,a7 for purposes of any 
tax imposed by this subtitle1 the       
taxpayer did not treat an individual as 

an employee for any period before the   
reclassification date with respect to   
such individual1 and  7,b7 in the case  
of periods after ,december #ca1 #aigh1  
and before such reclassification date1  
all ,federal tax returns 7including     
information returns7 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 employee1  then1 for    
purposes of applying such taxes for     
periods before such reclassification    
date with respect to the taxpayer1 the  
individual shall be deemed not to be an 
employee unless the taxpayer had no     
reasonable basis for not treating such  
individual as an employee4  7#b7        
,statutory standards providing one      
method of satisfying the requirements of
 paragraph 7#a7 ,for purposes of        
paragraph 7#a71 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 following3  7,a7 
,judicial precedent1 published rulings1 
technical advice with respect to the    
taxpayer1 or a letter ruling to the     
taxpayer4  7,b7 ,a past ,internal       
,revenue ,service audit of the taxpayer 
in which there was no assessment        
attributable to the treatment 7for      
purposes of any tax imposed by this     
subtitle7 of the individuals holding    
positions substantially similar to the  
position held by such individual4  7,c7 
,long-standing recognized practice of a 
significant segment of the industry in  
which such individual was engaged4  7#c7
 ,consistency required in the case of   
prior tax treatment ,paragraph 7#a7     
shall not apply with respect to the     
treatment of any individual 7hereafter  
in this paragraph referred to as the    
reclassified individual7 for purposes of
 any tax imposed by this subtitle for   

any period ending after ,december #ca1  
#aigh1 if the taxpayer 7or a            
predecessor7 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 #ca1 #aigg1   
and ending before the reclassification  
date with respect to such reclassified  
individual4  7c7 ,definitions ,for      
purposes of this section--  7#a7        
,reclassification date  7,a7 ,in general
 ,the term reclassification date means1 
with respect to any individual1 the     
earlier of--  7i7 the first day of the  
first calendar quarter beginning more   
than #ahj days after the date of an     
employee classification determination   
with respect to such individual1 or     
7ii7 the effective date of the first    
applicable final regulation issued by   
the ,secretary under subsection 7a7 with
 respect to such individual 7or1 if     
later1 the first day of the first       
calendar quarter beginning more than    

#ahj days after such regulation is      
issued74  7,b7 ,employee classification 
determination ,the term employee        
classification determination means1 with
 respect to any individual1 a           
determination by the ,secretary1 in     
connection with an audit of the taxpayer
 which is described in section #gdcf and
 which commences after the date which is
 #a year after the date of the enactment
 of this section1 that a class of       
individuals holding positions with such 
taxpayer which are substantially similar
 to the position held by such individual
 are employees4  7,c7 ,first applicable 
final regulation ,the term first        
applicable final regulation means1 with 
respect to any individual1 the first    
final regulation 7or other guidance of  
general applicability7 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 individual4  7#b7          

,employment status ,the term employment 
status means the status of an           
individual1 under the usual common law  
rules applicable in determining the     
employer-employee relationship1 as an   
employee or as an independent contractor
 7or other individual who is not an     
employee74  7d7 ,continuation of certain
 special rules  7#a7 ,exception for     
certain skilled workers ,subsection 7b7 
shall not apply in the case of an       
individual who1 pursuant to an          
arrangement between the taxpayer and    
another person1 provides services for   
such other person as an engineer1       
designer1 drafter1 computer programmer1 
systems analyst1 or other similarly     
skilled worker engaged in a similar line
 of work4  7#b7 ,notice of availability 
of section ,an officer or employee of   
the ,internal ,revenue ,service shall1  
before or at the commencement of any    
audit inquiry relating to the employment
 status of one or more individuals who  
perform services for the taxpayer1      

provide the taxpayer with a written     
notice of the provisions of this        
section4  7#c7 ,rules relating to       
statutory standards ,for purposes of    
subsection 7b77#b7--  7,a7 a taxpayer   
may not rely on an audit commenced after
 ,december #ca1 #aiif1 for purposes of  
subparagraph 7,b7 thereof unless such   
audit included an examination for       
purposes of any tax imposed by this     
subtitle whether the individual involved
 7or any individual holding a position  
substantially similar to the position   
held by the individual involved7 should 
be treated as an employee of the        
taxpayer1  7,b7 in no event shall the   
significant segment requirement of      
subparagraph 7,c7 thereof be construed  
to require a reasonable showing of the  
practice of more than #be percent of the
 industry 7determined by not taking into
 account the taxpayer71 and  7,c7 in    
applying the long-standing recognized   
practice requirement of subparagraph    
7,c7 thereof--  7i7 such requirement    

shall not be construed as requiring the 
practice to have continued for more than
 #aj years1 and  7ii7 a practice shall  
not fail to be treated as long-standing 
merely because such practice began after
 #aigh4  7#d7 ,availability of safe     
harbors ,nothing in this section shall  
be construed to provide that subsection 
7b7 only applies where the individual   
involved is otherwise an employee of the
 taxpayer4  7#e7 ,burden of proof  7,a7 
,in general ,if--  7i7 a taxpayer       
establishes a prima facie case that it  
was reasonable not to treat an          
individual as an employee for purposes  
of subsection 7b71 and  7ii7 the        
taxpayer has fully cooperated with      
reasonable requests from the ,secretary1
  then the burden of proof with respect 
to such treatment shall be on the       
,secretary4  7,b7 ,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 7b71 subparagraph 7,a7    
shall only apply for purposes of        
determining whether the taxpayer meets  
the requirements of subparagraph 7,a71  
7,b71 or 7,c7 of subsection 7b77#b74    
7#f7 ,preservation of prior period safe 
harbor ,if--  7,a7 an individual would  
7but for the treatment referred to in   
subparagraph 7,b77 be deemed not to be  
an employee of the taxpayer under       
subsection 7b7 for any prior period1 and
  7,b7 such individual is treated by the
 taxpayer as an employee for purposes of
 the taxes imposed by this subtitle for 
any subsequent period1  then1 for       
purposes of applying such taxes for such
 prior period with respect to the       
taxpayer1 the individual shall be deemed
 not to be an employee4  7#g7           
,substantially similar position ,for    
purposes of subsection 7b7 and this     
subsection1 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           
individuals4  7#h7 ,treatment of test   
room supervisors and proctors who assist
 in the administration of college       
entrance and placement exams  7,a7 ,in  
general ,in the case of an individual   
described in subparagraph 7,b7 who is   
providing services as a test proctor or 
room supervisor by assisting in the     
administration of college entrance or   
placement examinations1 subsection 7b7  
shall be applied to such services       
performed after ,december #ca1 #bjjf    
7and remuneration paid for such         
services71 without regard to paragraph  
7#c7 thereof4  7,b7 ,applicability ,an  
individual is described in this         
subparagraph if the individual--  7i7 is
 providing the services described in    
subsection 7b7 to an organization       
described in section #eja7;c7 and exempt
 from tax under section #eja7;a71 and   
7ii7 is not otherwise treated as an     
employee of such organization for       

purposes of this subtitle4  7#i7        
,treatment of securities broker dealers 
,in determining for purposes of this    
title whether a registered              
representative of a securities          
broker-dealer is an employee 7as defined
 in section #caba7;d771 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       
,government1 any ,state government1 or a
 governing body pursuant to a delegation
 by a ,federal or ,state agency4  7e7   
,statements to independent contractors  
7#a7 ,in general ,each person who       
contracts for the services of an        
independent contractor on a regular and 
ongoing basis1 within the scope of such 
person's trade or business1 shall       
provide a written statement to such     
independent contractor notifying such   
independent contractor of the ,federal  
tax obligations of an independent       
contractor1 the labor and employment law

 protections that do not apply to       
independent contractors1 and the right  
of such independent contractor to seek a
 status determination from the ,internal
 ,revenue ,service4  7#b7 ,independent  
contractor ,for purposes of this        
subsection1 the term independent        
contractor means any individual who is  
not treated as an employee by the person
 receiving the services referred to in  
paragraph 7#a74  7#c7 ,timing of        
statement ,except as otherwise provided 
by the ,secretary1 the statement        
required under paragraph 7#a7 shall be  
provided within a reasonable period of  
entering into the contract referred to  
in paragraph 7#a74  7#d7 ,development of
 model statement ,the ,secretary shall  
develop model materials for providing   
the statement required under paragraph  
7#a74  4  7b7 ,reduced penalty not      
applicable in cases of noncompliance    
with guidance without reasonable basis  
,subsection 7c7 of section #ceji of such
 ,code is amended--  7#a7 by striking if

 such liability and inserting  if-- 7#a7
 such liability  1 and  7#b7 by striking
 the period at the end and inserting  1 
or 7#b7 such liability relates to an    
individual who is treated as an employee
 under regulations or other guidance    
issued by the ,secretary under section  
#ceaa7;a7 and the taxpayer lacks a      
reasonable basis for treating the       
individual as other than an employee4   
,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 7#b7 7or another individual
 who holds a position with the taxpayer 
substantially similar to the position   
held by such individual7 is an employee1
 such taxpayer shall be treated for     
purposes of paragraph 7#b7 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    

#ahj 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 treatment4 4  
7c7 ,conforming amendments  7#a7        
,paragraph 7#b7 of section #fgbd7;d7 of 
such ,code is amended by striking or at 
the end of subparagraph 7,,gg71 by      
striking the period at the end of       
subparagraph 7,,hh7 and inserting 1 or1 
and by inserting after subparagraph     
7,,hh7 the following new subparagraph3  
7,,ii7 section #ceaa7;e7 7relating to   
statements to independent contractors74 
4  7#b7 ,paragraph 7#b7 of section      
#gdcf7;a7 of such ,code is amended by   
striking subsection 7a7 of section #ecj 
of the ,revenue ,act of #aigh and       
inserting section #ceaa7;b74  7#c7 ,the 
table of sections for chapter #be of    
such ,code is amended by adding at the  
end the following new item3  ,sec4      
#ceaa4 ,authority to issue guidance     
clarifying employment status4  4  7d7   

,termination of section #ecj of the     
,revenue ,act of #aigh ,the ,revenue    
,act of #aigh is amended by striking    
section #ecj4  7e7 ,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 #ceaa7;a7 of the ,internal
 ,revenue ,code of #aihf 7as added by   
this section73  7#a7 ,a report each     
fiscal year on worker classification    
which shall include the total number of 
examinations of employers initiated     
because of suspected worker             
classification issues1 the total number 
of examinations that included           
determinations on worker classification 
issues1 the amount of additional tax    
liabilities associated with worker      
classification enforcement actions1 the 
number of workers reclassified as a     
result of these actions1 the number of  
requests for ,determination of ,worker  
,status 7,form ,,ss-#h71 and technical  

guidance on how to understand the data  
provided in the report4  7#b7 ,a report 
each fiscal year in which new           
statistically valid data is compiled and
 interpreted on worker classification1  
prepared on the basis of information    
gathered during an ,employment ,tax     
,study conducted by the ,national       
,research ,program 7,,nrp7 of the       
,internal ,revenue ,service4 ,such      
report shall provide statistical        
estimates of the number of employers    
misclassifying workers1 the number of   
workers misclassified1 the industries   
involved1 data interpretations and      
conclusions1 and a description of the   
impact of improper worker classification
 on the employment tax gap4  7f7        
,effective dates  7#a7 ,delayed         
effective date of regulations and       
guidance ,except as provided in         
paragraph 7#b71 any regulation or other 
guidance issued under section #ceaa7;a7 
of the ,internal ,revenue ,code of      
#aihf1 as added by this section1 shall  

not apply to services rendered before   
the date which is #a year after the date
 of the enactment of this ,act4  7#b7   
,treatment of securities broker dealers 
,paragraph 7#i7 of section #ceaa7;d7 of 
the ,internal ,revenue ,code of #aihf1  
as added by this section1 shall apply to
 services performed after ,december #ca1
 #aiig4  7#c7 ,authority to issue       
regulations and guidance immediately ,so
 much of the amendment made by          
subsection 7d7 as relates to subsection 
7b7 of section #ecj of the ,revenue ,act
 of #aigh shall take effect on the date 
of the enactment of this ,act4  7#d7    
,delayed termination of remainder of    
,section #ecj of the ,revenue ,act of   
#aigh ,except as provided in paragraph  
7#c71 the amendments made by subsections
 7c77#a7 and 7d7 shall apply to services
 rendered on or after the date which is 
#a year after the date of the enactment 
of this ,act4