I 

114TH CONGRESS 

1ST SESSION H. R. 2483 

To amend the Internal Revenue Code of 1986 to provide standards for 

determining employment status, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 20, 2015 

Mr. PAULSEN introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

standards for determining employment status, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Independent Con5 tractor Tax Fairness and Simplification Act of 2015’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 

8 (1) Independent contractors play a vital role in 

9 our economy. 


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1 (2) Independent contractors embrace the entre2 preneurial spirit of our country and are free to seek 

3 economic opportunities that best fit their needs. 

4 (3) Many small businesses start as an inde5 pendent contractor and grow creating jobs for other 

6 individuals. 

7 (4) The proper classification of individuals as 

8 employees and independent contractors is a signifi9 cant responsibility for businesses. 

10 (5) The rules and guidelines for determining 

11 whether an individual is an independent contractor 

12 or an employee lack clarity and consistency. 

13 (6) It is in the best interests of taxpayers, the 

14 Federal Government and the business community to 

15 have fair and objective rules for determining who is 

16 an independent contractor and who is an employee. 

17 SEC. 3. STANDARDS FOR DETERMINING EMPLOYMENT STA18 TUS. 

19 (a) IN GENERAL.—Chapter 25 of the Internal Rev20 enue Code of 1986 (general provisions relating to employ21 ment taxes) is amended by adding after section 3511 the 

22 following new sections: 


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1 ‘‘SEC. 3512. CONTROVERSIES INVOLVING WHETHER INDI2 VIDUALS ARE EMPLOYEES FOR PURPOSES OF 

3 THE EMPLOYMENT TAXES. 

4 ‘‘(a) TERMINATION OF CERTAIN EMPLOYMENT TAX

5 LIABILITY.— 

6 ‘‘(1) IN GENERAL.—If— 

7 ‘‘(A) for purposes of employment taxes, the 

8 taxpayer did not treat an individual as an em9 ployee for any period, and 

10 ‘‘(B) in the case of periods after December 

11 31, 1978, all returns (including information re12 turns) required to be filed by the taxpayer with 

13 respect to such individual for such period are 

14 filed on a basis consistent with the taxpayer’s 

15 treatment of such individual as not being an 

16 employee, 

17 then, for purposes of applying such taxes for such 

18 period with respect to the taxpayer, the individual 

19 shall be deemed not to be an employee unless the 

20 taxpayer had no reasonable basis for not treating 

21 such individual as an employee. 

22 ‘‘(2) STATUTORY STANDARDS PROVIDING ONE

23 METHOD OF SATISFYING THE REQUIREMENTS OF

24 PARAGRAPH (1).—For purposes of paragraph (1), a 

25 taxpayer shall in any case be treated as having a 

26 reasonable basis for not treating an individual as an 


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1 employee for a period if the taxpayer’s treatment of 

2 such individual for such period was in reasonable re3 liance on any of the following— 

4 ‘‘(A) judicial precedent, published rulings, 

5 technical advice with respect to the taxpayer, or 

6 a letter ruling to the taxpayer, 

7 ‘‘(B) a past Internal Revenue Service audit 

8 of the taxpayer in which there was no assess9 ment attributable to the treatment (for employ10 ment tax purposes) of the individuals holding 

11 positions substantially similar to the position 

12 held by this individual, or 

13 ‘‘(C) long-standing recognized practice of a 

14 significant segment of the industry in which 

15 such individual was engaged. 

16 ‘‘(3) CONSISTENCY REQUIRED IN THE CASE OF

17 PRIOR TAX TREATMENT.—Paragraph (1) shall not 

18 apply with respect to the treatment of any individual 

19 for employment tax purposes for any period ending 

20 after December 31, 2015, if the taxpayer (or a pred21 ecessor) has treated any individual holding a sub22 stantially similar position as an employee for pur23 poses of the employment taxes for any period begin24 ning after December 31, 2014. 


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1 ‘‘(4) REFUND OR CREDIT OF OVERPAYMENT.— 

2 If refund or credit of any overpayment of an employ3 ment tax resulting from the application of paragraph 

4 (1) is not barred on the date of the enactment of 

5 this section by any law or rule of law, the period for 

6 filing a claim for refund or credit of such overpay7 ment (to the extent attributable to the application of 

8 paragraph (1)) shall not expire before the date 1 

9 year after the date of the enactment of this section. 

10 ‘‘(b) PROHIBITION AGAINST REGULATIONS AND

11 RULINGS ON EMPLOYMENT STATUS.—Except for pur12 poses of providing Revenue Rulings with respect to section 

13 3513, no regulation or Revenue Ruling shall be published 

14 on or after the date of the enactment of this section by 

15 the Department of the Treasury (including the Internal 

16 Revenue Service) with respect to the employment status 

17 of any individual for purposes of the employment taxes. 

18 ‘‘(c) DEFINITIONS.—For purposes of this section— 

19 ‘‘(1) EMPLOYMENT TAX.—The term ‘employ20 ment tax’ means any tax imposed by this subtitle. 

21 ‘‘(2) EMPLOYMENT STATUS.—The term ‘em22 ployment status’ means the status of an individual, 

23 under the usual common law rules applicable in de24 termining the employer-employee relationship, as an 


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1 employee or as an independent contractor (or other 

2 individual who is not an employee). 

3 ‘‘(d) EXCEPTION.—This section shall not apply in the 

4 case of an individual who, pursuant to an arrangement 

5 between the taxpayer and another person, provides serv6 ices for such other person as an engineer, designer, draft7 er, computer programmer, systems analyst, or other simi8 larly skilled worker engaged in a similar line of work. 

9 ‘‘(e) SPECIAL RULES FOR APPLICATION OF SEC10 TION.— 

11 ‘‘(1) NOTICE OF AVAILABILITY OF SECTION.— 

12 An officer or employee of the Internal Revenue Serv13 ice shall, before or at the commencement of any 

14 audit inquiry relating to the employment status of 

15 one or more individuals who perform services for the 

16 taxpayer, provide the taxpayer with a written notice 

17 of the provisions of this section. 

18 ‘‘(2) RULES RELATING TO STATUTORY STAND19 ARDS.—For purposes of subsection (a)(2)— 

20 ‘‘(A) a taxpayer may not rely on an audit 

21 commenced after December 31, 1996, for pur22 poses of subparagraph (B) thereof unless such 

23 audit included an examination for employment 

24 tax purposes of whether the individual involved 

25 (or any individual holding a position substanVerDate Sep 11 2014 02:52 May 28, 2015 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2483.IH H2483

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1 tially similar to the position held by the indi2 vidual involved) should be treated as an em3 ployee of the taxpayer, 

4 ‘‘(B) in no event shall the significant seg5 ment requirement of subparagraph (C) thereof 

6 be construed to require a reasonable showing of 

7 the practice of more than 25 percent of the in8 dustry (determined by not taking into account 

9 the taxpayer), and 

10 ‘‘(C) in applying the long-standing recog11 nized practice requirement of subparagraph (C) 

12 thereof— 

13 ‘‘(i) such requirement shall not be 

14 construed as requiring the practice to have 

15 continued for more than 10 years, and 

16 ‘‘(ii) a practice shall not fail to be 

17 treated as long-standing merely because 

18 such practice began after 1978. 

19 ‘‘(3) AVAILABILITY OF SAFE HARBORS.—Noth20 ing in this section shall be construed to provide that 

21 subsection (a) only applies where the individual in22 volved is otherwise an employee of the taxpayer. 

23 ‘‘(4) BURDEN OF PROOF.— 

24 ‘‘(A) IN GENERAL.—If— 


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1 ‘‘(i) a taxpayer establishes a prima 

2 facie case that it was reasonable not to 

3 treat an individual as an employee for pur4 poses of this section, and 

5 ‘‘(ii) the taxpayer has fully cooperated 

6 with reasonable requests from the Sec7 retary of the Treasury or his delegate, 

8 then the burden of proof with respect to such 

9 treatment shall be on the Secretary. 

10 ‘‘(B) EXCEPTION FOR OTHER REASONABLE

11 BASIS.—In the case of any issue involving 

12 whether the taxpayer had a reasonable basis 

13 not to treat an individual as an employee for 

14 purposes of this section, subparagraph (A) shall 

15 only apply for purposes of determining whether 

16 the taxpayer meets the requirements of sub17 paragraph (A), (B), or (C) of subsection (a)(2). 

18 ‘‘(5) PRESERVATION OF PRIOR PERIOD SAFE

19 HARBOR.—If— 

20 ‘‘(A) an individual would (but for the 

21 treatment referred to in subparagraph (B)) be 

22 deemed not to be an employee of the taxpayer 

23 under subsection (a) for any prior period, and 


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1 ‘‘(B) such individual is treated by the tax2 payer as an employee for employment tax pur3 poses for any subsequent period, 

4 then, for purposes of applying such taxes for such 

5 prior period with respect to the taxpayer, the indi6 vidual shall be deemed not to be an employee. 

7 ‘‘(6) SUBSTANTIALLY SIMILAR POSITION.—For 

8 purposes of this section, the determination as to 

9 whether an individual holds a position substantially 

10 similar to a position held by another individual shall 

11 include consideration of the relationship between the 

12 taxpayer and such individuals. 

13 ‘‘SEC. 3513. SAFE HARBOR STANDARDS FOR DETERMINING 

14 EMPLOYMENT STATUS. 

15 ‘‘(a) GENERAL RULE.—For purposes of this title, if 

16 the requirements of subsection (c) are met with respect 

17 to any service performed by any service provider, then with 

18 respect to such service— 

19 ‘‘(1) the service provider shall not be treated as 

20 an employee, 

21 ‘‘(2) the service recipient shall not be treated as 

22 an employer, 

23 ‘‘(3) the payor shall not be treated as an em24 ployer, and 


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1 ‘‘(4) compensation paid or received for such 

2 service shall not be treated as paid or received with 

3 respect to employment. 

4 ‘‘(b) STATUTORY EMPLOYEES.—Nothing in this sec5 tion shall supersede the categories of employees described 

6 in section 3121(d)(3). 

7 ‘‘(c) REQUIREMENTS.— 

8 ‘‘(1) IN GENERAL.—The requirements of this 

9 subsection are met if the requirements of para10 graphs (2) and (3) are met. 

11 ‘‘(2) INVESTMENT OR INCOME FLUCTUATION.— 

12 A service provider meets the requirements of this 

13 paragraph if the service provider— 

14 ‘‘(A) incurs significant financial responsi15 bility for providing and maintaining the nec16 essary equipment and facilities to perform the 

17 work outlined in their qualified agreement, and 

18 ‘‘(B) either— 

19 ‘‘(i) incurs unreimbursed expenses, or 

20 ‘‘(ii) risks income fluctuations because 

21 the remuneration with respect to such 

22 service is directly related to sales or other 

23 output rather than solely to the number of 

24 hours actually worked or expenses in25 curred. 


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1 ‘‘(3) CONTROL OF TIME WORKED AND PER2 FORMANCE OF SERVICES.—A service provider meets 

3 the requirements of this paragraph if the service 

4 provider— 

5 ‘‘(A) is compensated upon factors related 

6 to the work performed, such as a percentage of 

7 revenue or scheduled rates, and not solely on 

8 the basis of hours or time expended, and 

9 ‘‘(B) substantially controls the means and 

10 manner of performing the services, in conform11 ance with regulatory requirements, the speci12 fications of the service recipient or payor and 

13 any additional requirements specified in the 

14 qualified agreement. 

15 ‘‘(d) DEFINITIONS.—For the purposes of this sec16 tion— 

17 ‘‘(1) SERVICE PROVIDER.—The term ‘service 

18 provider’ means any individual or entity that per19 forms service for another company under a qualified 

20 agreement. 

21 ‘‘(2) SERVICE RECIPIENT.—The term ‘service 

22 recipient’ means the person or entity for whom the 

23 service provider performs such service. 

24 ‘‘(3) PAYOR.—The term ‘payor’ means the per25 son or entity that pays the service provider for the 


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1 performance of such service in the event that the 

2 service recipients do not pay the service provider. 

3 ‘‘(4) EXCEPTIONS.—The terms ‘service recipi4 ent’ and ‘payor’ do not include any entity which is 

5 owned in whole or in part by the service provider. 

6 ‘‘(5) QUALIFIED AGREEMENT.—The term 

7 ‘qualified agreement’ means a written contract be8 tween a service provider and the service recipient for 

9 whom the services are performed or the payor that 

10 provides that the service provider— 

11 ‘‘(A) will not be treated as an employee 

12 with respect to such services for the purpose of 

13 this title, and 

14 ‘‘(B) has been informed of the Federal tax 

15 obligations resulting from such treatment.’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) Section 530 of the Revenue Act of 1978 is 

18 hereby repealed. 

19 (2) The table of sections for chapter 25 of such 

20 Code is amended by adding at the end the following 

21 new items: 

‘‘Sec. 3512. Controversies involving whether individuals are employees for purposes of the employment taxes. 

‘‘Sec. 3513. Safe harbor standards for determining employment status.’’. 

22 (c) EFFECTIVE DATES.— 

23 (1) IN GENERAL.—Except as provided in para24 graph (2), the amendments made by this Act shall 


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1 take effect beginning on the first day of the first cal2 endar year beginning after the date of enactment of 

3 this Act. 

4 (2) REPEAL OF SECTION 530.—The amendment 

5 made by subsection (b)(1) shall apply to periods in 

6 calendar years beginning after the date of enactment 

7 of this Act. 

Æ 


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