,,ii #aafth ,,congress #ast ,session ,s4 #gjj ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #g1 #bjai,mr4 ,thune introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide a safe harbor for determinations of worker classification1 to require increased reporting1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,new ,economy ,works to ,guarantee ,independence and ,growth ,act of #bjai or the ,,new ,,gig ,act of #bjai4 #b4 ,determination of worker classification 7a7 ,in general ,chapter #gi of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #ggjf4 ,determination of worker classification 7a7 ,in general ,for purposes of this title 7and notwithstanding any provision of this title not contained in this section to the contrary71 if the requirements of subsections 7b71 7c71 and 7d7 are met with respect to any service performed by a service provider1 then with respect to such service-- 7#a7 the service provider shall not be treated as an employee1 7#b7 the service recipient shall not be treated as an employer1 7#c7 any payor shall not be treated as an employer1 and 7#d7 the compensation paid or received for such service shall not be treated as paid or received with respect to employment4 7b7 ,general service provider requirements 7#a7 ,in general ,the requirements of this subsection are met with respect to any service if the service provider either-- 7,a7 meets the requirements of paragraph 7#b7 with respect to such service1 or 7,b7 in the case of a service provider engaged in the trade or business of selling 7or soliciting the sale of7 goods or services1 meets the requirements of paragraph 7#c7 with respect to such service4 7#b7 ,general requirements 7,a7 ,in general ,the requirements of this paragraph are met with respect to any service if the service provider1 in connection with performing the service-- 7i7 incurs expenses-- 7,i7 which are deductible under section #afb1 and 7,,ii7 a significant portion of which are not reimbursed1 7ii7 agrees to perform the service for a particular amount of time1 to achieve a specific result1 or to complete a specific task1 and 7iii7 satisfies not less than one of the factors described in subparagraph 7,b74 7,b7 ,factors ,the factors described in this subparagraph are the following3 7i7 ,the service provider has a significant investment in assets or training which are applicable to the service performed4 7ii7 ,the service provider is not required to perform services exclusively for the service recipient or payor4 7iii7 ,the service provider has not been treated as an employee by the service recipient or payor for substantially the same services during the #a-year period ending with the date of the commencement of services under the contract described in subsection 7d74 7iv7 ,the service provider is not compensated on a basis which is tied primarily to the number of hours actually worked4 7#c7 ,alternative requirements with respect to sales persons ,in the case of a service provider engaged in the trade or business of selling 7or soliciting the sale of7 goods or services1 the requirements of this paragraph are met with respect to any service provided in the ordinary course of such trade or business if-- 7,a7 the service provider is compensated primarily on a commission basis1 and 7,b7 substantially all the compensation for such service is directly related to sales of goods or services rather than to the number of hours worked4 7c7 ,place of business or own equipment requirement ,the requirement of this subsection is met with respect to any service if the service provider-- 7#a7 has a principal place of business1 7#b7 does not provide the service primarily in the service recipient's place of business1 7#c7 pays a fair market rent for use of the service recipient's or payor's place of business1 or 7#d7 provides the service primarily using equipment supplied by the service provider4 7d7 ,written contract requirement ,the requirements of this subsection are met with respect to any service if such service is performed pursuant to a written contract between the service provider and the service recipient or payor1 whichever is applicable1 which meets the following requirements3 7#a7 ,the contract includes each of the following3 7,a7 ,the service provider's name1 taxpayer identification number1 and address4 7,b7 ,a statement that the service provider will not be treated as an employee with respect to the services provided pursuant to the contract for purposes of this title4 7,c7 ,a statement that the service recipient or payor will withhold upon and report to the ,internal ,revenue ,service the compensation payable pursuant to the contract consistent with the requirements of this title4 7,d7 ,a statement that the service provider is responsible for payment of ,federal1 ,state1 and local taxes1 including self-employment taxes1 on compensation payable pursuant to the contract4 7,e7 ,a statement that the contract is intended to be considered a contract described in this subsection4 ,the contract shall not fail to meet the requirements of this paragraph merely because the information described in subparagraph 7,a7 is collected at the time payment is made for the services and not in advance1 or because the contract provides that an agent of the service recipient or payor will fulfill any of the responsibilities of the service recipient or payor described in the preceding subparagraphs4 7#b7 ,the term of the contract does not exceed #b years4 ,the preceding sentence shall not prevent one or more subsequent written renewals of the contract from satisfying the requirements of this subsection if the term of each such renewal does not exceed #b years and if the information required under paragraph 7#a77;,a7 is updated in connection with each such renewal4 7#c7 ,the contract 7or renewal7 is signed 7which may include signatures in electronic form7 by the service recipient or payor and the service provider not later than the date on which the aggregate payments made by the service recipient or payor to the service provider exceeds #a1jjj for the year covered by the contract 7or renewal74 7e7 ,reporting requirements 7#a7 ,in general ,for purposes of making any determination with respect to the liability of a service recipient or payor for any tax during any taxable year with respect to a service provider1 the application of this section shall be conditioned on either the service recipient or the payor satisfying the reporting requirements applicable to such service recipient or payor under section #fjda7;a71 #fjda;,a7a71 or #fjej,w with respect to such service provider for such period4 7#b7 ,reasonable cause ,for purposes of paragraph 7#a71 such reporting requirements shall be treated as met if the failure to satisfy such requirements is due to reasonable cause and not willful neglect4 7f7 ,exception for services provided by owner ,this section shall not apply with respect to any service provided by a service provider to a service recipient or payor if the service provider owns any interest in the service recipient or the payor with respect to the service provided4 ,the preceding sentence shall not apply in the case of a service recipient or payor the stock of which is regularly traded on an established securities market4 7g7 ,limitation on reclassification by ,secretary ,for purposes of this title-- 7#a7 ,effect of reclassification on service recipients and payors ,a determination by the ,secretary that a service recipient or a payor should have treated a service provider as an employee shall be effective with respect to the service recipient or payor no earlier than the notice date if-- 7,a7 the service recipient or the payor entered into a written contract with the service provider which meets the requirements of subsection 7d71 7,b7 the service recipient or the payor satisfied the applicable reporting requirements of section #fjda7;a71 #fjda;,a7a71 or #fjej,w for all relevant taxable years with respect to the service provider1 7,c7 the service recipient or the payor collected and paid over all applicable taxes imposed under subtitle ,c for all relevant taxable years with respect to the service provider1 and 7,d7 the service recipient or the payor demonstrates a reasonable basis for having determined that the service provider should not be treated as an employee under this section and that such determination was made in good faith4 7#b7 ,effect of reclassification on service providers ,a determination by the ,secretary that a service provider should have been treated as an employee shall be effective with respect to the service provider no earlier than the notice date if-- 7,a7 the service provider entered into a written contract with the service recipient or the payor which meets the requirements of subsection 7d71 7,b7 the service provider satisfied the applicable reporting requirements of sections #fjab7;a7 and #fjag for all relevant taxable years with respect to the service recipient or the payor1 and 7,c7 the service provider demonstrates a reasonable basis for determining that the service provider is not an employee under this section and that such determination was made in good faith4 7#c7 ,notice date ,for purposes of this subsection1 the term notice date means the #cjth day after the earliest of-- 7,a7 the date on which the first letter of proposed deficiency which allows the service provider1 the service recipient1 or the payor an opportunity for administrative review in the ,internal ,revenue ,service ,office of ,appeals is sent1 7,b7 the date on which a deficiency notice under section #fbab is sent1 or 7,c7 the date on which a notice of determination under section #gdcf7;b77#b7 is sent4 7#d7 ,reasonable cause exception ,the requirements of paragraphs 7#a77;,b71 7#a77;,c71 and 7#b77;,b7 shall be treated as met if the failure to satisfy such requirements is due to reasonable cause and not willful neglect4 7#e7 ,no restriction on administrative or judicial review ,nothing in this subsection shall be construed as limiting any provision of law which provides an opportunity for administrative or judicial review of a determination by the ,secretary4 7h7 ,rule of construction ,nothing in this section shall be construed as-- 7#a7 limiting the ability or right of a service provider1 service recipient1 or payor to apply any other provision of this title1 section #ecj of the ,revenue ,act of #aigh1 or any common law rules for determining whether an individual is an employee1 or 7#b7 establishing a prerequisite for the application of any provision of law described in paragraph 7#a74 7i7 ,definitions ,for purposes of this section-- 7#a7 ,service provider 7,a7 ,in general ,the term service provider means any qualified person who performs service for another person4 7,b7 ,qualified person ,the term qualified person means-- 7i7 any natural person1 or 7ii7 any entity if any of the services referred to in subparagraph 7,a7 are performed by one or more natural persons who directly own interests in such entity4 7#b7 ,service recipient ,the term service recipient means the person for whom the service provider performs such service4 7#c7 ,payor ,the term payor means-- 7,a7 any person1 including the service recipient1 who pays the service provider for performing such service1 or 7,b7 any marketplace platform1 as defined in section #fjej,w7d77#c77;,c74 7j7 ,regulations ,notwithstanding section #ecj7;d7 of the ,revenue ,act of #aigh1 the ,secretary shall issue such regulations as the ,secretary determines are necessary to carry out the purposes of this section4 4 7b7 ,voluntary withholding agreements and worker classification ,section #cdjb7p7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#d7 ,worker classification ,agreements under paragraph 7#c7 shall not be taken into account in determining whether any party to such agreement is an employee or an employer for purposes of this title4 4 7c7 ,withholding by payor in case of certain persons classified as not employees ,section #cdjb of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7u7 ,extension of withholding to payments to certain persons classified as not employees 7#a7 ,in general ,for purposes of this chapter and so much of subtitle ,f as relates to this chapter1 compensation paid pursuant to a contract described in section #ggjf7;d7 shall be treated as if it were a payment of wages by an employer to an employee4 7#b7 ,amount withheld ,except as otherwise provided under subsection 7i71 the amount to be deducted and withheld pursuant to paragraph 7#a7 with respect to compensation paid pursuant to any such contract during any calendar year shall be an amount equal to #e percent of so much of the amount of such compensation as does not exceed #bj1jjj4 4 7d7 ,direct sellers of promotional products ,subsection 7b7 of section #cejh of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 in paragraph 7#b77;,a7-- 7,a7 in clause 7ii71 by striking or at the end2 7,b7 in clause 7iii71 by adding or at the end2 and 7,c7 by inserting after clause 7iii7 the following new clause3 7iv7 is engaged in the trade or business of selling1 or soliciting the sale of1 promotional products from other than a permanent retail establishment1 2 7#b7 by redesignating paragraph 7#c7 as paragraph 7#d72 and 7#c7 by inserting after paragraph 7#b7 the following new paragraph3 7#c7 ,promotional product ,for purposes of paragraph 7#b77;,a77iv71 the term promotional product means a tangible item with permanently marked promotional words1 symbols1 or art of the purchaser4 4 7e7 ,reporting 7#a7 ,information at source ,section #fjda of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 in subsection 7a7-- 7i7 in the heading1 by striking #fjj and inserting #a1jjj2 and 7ii7 by striking #fjj or more in any taxable year and inserting #a1jjj or more in any taxable year2 and 7,b7 by adding at the end the following new subsection3 7h7 ,special rules for certain persons classified as not employees 7#a7 ,in general ,in the case of any service recipient or payor required to make a return under subsection 7a7 with respect to compensation to which section #ggjf7;a7 applies-- 7,a7 such return shall include-- 7i7 the aggregate amount of such compensation paid to each person whose name is required to be included on such return1 7ii7 the aggregate amount deducted and withheld under section #cdjb7s7 with respect to such compensation1 and 7iii7 an indication of whether a copy of the contract described in section #ggjf7;d7 is on file with the service recipient or payor1 and 7,b7 the statement required to be furnished under subsection 7d7 shall include the information described in subparagraph 7,a7 with respect to the service provider to whom such statement is furnished4 7#b7 ,definitions ,terms used in this subsection which are also used in section #ggjf shall have the same meaning as when used in such section4 4 7#b7 ,returns regarding payments of remuneration for services and direct sales ,section #fjda;,a of such ,code is amended-- 7,a7 in paragraph 7#b7 of subsection 7a71 by striking #fjj and inserting #a1jjj2 and 7,b7 by adding at the end the following new subsection3 7g7 ,special rules for certain persons classified as not employees ,rules similar to the rules of subsection 7h7 of section #fjda shall apply for purposes of this section4 4 7#c7 ,returns relating to payments made in settlement of payment card and third party network transactions ,section #fjej,w of such ,code is amended-- 7,a7 in subsection 7d71 by amending paragraph 7#c7 to read as follows3 7#c7 ,third party payment network 7,a7 ,in general ,the term third party payment network means any agreement or arrangement-- 7i7 which involves the establishment of accounts with a central organization or marketplace platform by a substantial number of persons who-- 7,i7 are unrelated to such organization or platform1 7,,ii7 provide goods or services1 and 7,,iii7 have agreed to settle transactions for the provision of such goods or services pursuant to such agreement or arrangement1 7ii7 which provides for standards and mechanisms for settling such transactions1 and 7iii7 which guarantees persons providing goods or services pursuant to such agreement or arrangement that such persons will be paid for providing such goods or services4 7,b7 ,exception ,the term third party payment network shall not include any agreement or arrangement which provides for the issuance of payment cards4 7,c7 ,marketplace platform ,for purposes of subparagraph 7,a71 the term marketplace platform means any person who-- 7i7 operates a digital website1 mobile application1 or similar system that facilitates the provision of goods or services by providers to recipients1 7ii7 enters into an agreement with each provider stating that such provider will not be treated as an employee with respect to such goods or services1 7iii7 provides standards and mechanisms for settling such facilitated transactions1 and 7iv7 guarantees each provider of goods or services pursuant to such agreement that the provider will be paid for such facilitated transaction4 2 7,b7 by amending subsection 7e7 to read as follows3 7e7 ,exception for de minimis payments by third party settlement organizations 7#a7 ,in general ,a third party settlement organization shall be required to report any information under subsection 7a7 with respect to third party network transactions of any participating payee only if the amount which would otherwise be reported under subsection 7a77#b7 with respect to such transactions exceeds #a1jjj4 7#b7 ,exception 7,a7 ,marketplace platforms ,in the case of a third party settlement organization which is a marketplace platform 7as defined in subsection 7d77#c77;,c77 through which substantially all the participating payees are primarily engaged in the sale of goods1 such marketplace platform shall be required to report any information under subsection 7a7 with respect to third party network transactions of such payee only if-- 7i7 the amount which would otherwise be reported under subsection 7a77#b7 with respect to such transaction exceeds #e1jjj1 or 7ii7 the aggregate number of transactions exceeds #ej4 7,b7 ,other third party settlement organizations ,in the case of a third party settlement organization other than a marketplace platform-- 7i7 the rules of subparagraph 7,a7 shall apply in the case of information required to be reported1 or which would otherwise be reported1 under subsection 7a7 to any participating payee who is primarily engaged in the sale of goods1 and 7ii7 the determination of whether a participating payee is primarily engaged in the sale of goods may be made separately for each participating payee4 7#c7 ,election to report ,notwithstanding paragraphs 7#a7 and 7#b71 a third party settlement organization may elect to report any information under subsection 7a7 with respect to third party network transactions of any participating payee without regard to the amount reported under subsection 7a77#b7 with respect to such transactions or the aggregate number of such transactions4 2 and 7,c7 in subsection 7f7-- 7i7 in paragraph 7#a71 by striking and at the end2 7ii7 in paragraph 7#b71 by striking the period at the end and inserting 1 and2 and 7iii7 by inserting after paragraph 7#b7 the following new paragraph3 7#c7 the amount1 if any1 withheld pursuant to section #cdjb7s74 4 7f7 ,proceedings for determination of employment status ,paragraph 7#a7 of section #gdcf7;b7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7#a7 ,petitioner ,a pleading may be filed under this section only by-- 7,a7 the person for whom the services are performed1 including the service recipient or the payor1 or 7,b7 any service provider which the ,secretary has determined should have been treated as an employee4 ,all terms used in this paragraph which are also used in section #ggjf have the meanings given such terms in section #ggjf7;i74 4 7g7 ,clerical amendment ,the table of sections for chapter #gi of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new item3 ,sec4 #ggjf4 ,determination of worker classification4 4 7h7 ,effective date 7#a7 ,in general ,except as provided in paragraphs 7#b71 7#c71 and 7#d71 the amendments made by this section shall apply to services performed after ,december #ca1 #bjai 7and to payments made for such services after such date74 7#b7 ,grace period to begin withholding ,a contract shall not be treated as failing to meet the requirements of section #ggjf7;d77#a77;,c7 of the ,internal ,revenue ,code of #aihf 7as added by this section71 and a service recipient or payor shall not be treated as failing to meet any such requirement1 with respect to compensation paid to a service provider before the date that is #ahj days after the date of the enactment of this ,act4 7#c7 ,reporting ,except as provided in paragraph 7#d71 the amendments made by subsection 7e7 shall apply to returns the due date for which is after the date which is #b years after the date of the enactment of this ,act4 7#d7 ,exception for de minimis payments by third party settlement organizations ,the amendment made by subsection 7e77#c77;,b7 shall apply to payments made after ,december #ca1 #bjai4