291 
‘‘(5) to the extent possible, propose changes in 
the administrative practices of the corporation to 
mitigate problems; 
‘‘(6) identify potential legislative changes which 
may be appropriate to mitigate problems; and 
‘‘(7) refer instances of fraud, waste, and abuse, 
and violations of law to the Office of the Inspector 
General of the corporation. 
‘‘(c) REMOVAL.—If the Participant and Plan Sponsor 
Advocate is removed from office or is transferred to an-
other position or location within the Department of Labor, 
the Secretary shall communicate in writing the reasons for 
any such removal or transfer to Congress not less than 
30 days before the removal or transfer. Nothing in this 
subsection shall prohibit a personnel action otherwise au-
thorized by law, other than transfer or removal. 
‘‘(d) COMPENSATION.—The annual rate of basic pay 
for the Participant and Plan Sponsor Advocate shall be 
the rate payable for level III of the Executive Schedule 
under section 5314 of title 5, United States Code, plus 
3 percent. 
‘‘(e) ANNUAL REPORT.— 
‘‘(1) IN GENERAL.—Not later than December 
31 of each calendar year, the Participant and Plan 
Sponsor Advocate shall report to the Health, Edu-
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292 
cation, Labor, and Pensions Committee of the Sen-
ate, the Committee on Finance of the Senate, the 
Committee on Education and the Workforce of the 
House of Representatives, and the Committee on 
Ways and Means of the House of Representatives on 
the activities of the Office of the Participant and 
Plan Sponsor Advocate during the fiscal year ending 
during such calendar year. 
‘‘(2) CONTENT.—Each report submitted under 
paragraph (1) shall— 
‘‘(A) describe the activities, and evaluate 
the effectiveness of the Participant and Plan 
Sponsor Advocate during the preceding year; 
‘‘(B) identify significant problems the Par-
ticipant and Plan Sponsor Advocate has identi-
fied; 
‘‘(C) include specific legislative and regu-
latory changes to address the problems; and 
‘‘(D) identify any actions taken to correct 
problems identified in any previous report. 
‘‘(3) CONCURRENT SUBMISSION.—The Partici-
pant and Plan Sponsor Advocate shall submit a copy 
of each report to the Secretary of Labor, the Direc-
tor of the corporation, and any other appropriate of-
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293 
ficial at the same time such report is submitted to 
the committees of Congress under paragraph (1).’’. 
(b) CLERICAL AMENDMENT.—The table of contents 
in section 1 of the Employee Retirement Income Security 
Act of 1974 is amended by inserting after the item relat-
ing to section 4003 the following new item: 
‘‘4004. Participant and Plan Sponsor Advocate.’’. 
SEC. 365. INCREASE IN MULTIEMPLOYER PLAN BENEFIT 
GUARANTEE AND ANNUAL PREMIUM RATES. 
(a) MONTHLY BENEFIT GUARANTEE.— 
(1) IN GENERAL.—Subparagraph (A) of section 
4022A(c)(1) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1322a(c)(1)) is 
amended to read as follows: 
‘‘(A) 100 percent of the accrual rate up to $11, 
plus the sum of— 
‘‘(i) 75 percent of the lesser of— 
‘‘(I) $33, or 
‘‘(II) the accrual rate, if any, in ex-
cess of $11 and up to $44, and 
‘‘(ii) 50 percent of the lesser of— 
‘‘(I) $40, or 
‘‘(II) the accrual rate, if any, in ex-
cess of $44, and’’. 
(2) ADJUSTMENT
FOR
INFLATION.—Section 
4022A(c) of such Act (29 U.S.C. 1322a(c)) is 
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294 
amended by adding at the end the following new 
paragraph: 
‘‘(4) For each plan year beginning in a calendar year 
after 2011, there shall be substituted for each dollar 
amount specified in subparagraph (A) of paragraph (1) 
an amount equal to the greater of— 
‘‘(A) the product derived by multiplying such 
dollar amount specified in subparagraph (A) of 
paragraph (1) by the ratio of— 
‘‘(i) the national average wage index (as 
defined in section 209(k)(1) of the Social Secu-
rity Act) for the first of the 2 calendar years 
preceding the calendar year in which such plan 
year begins, to 
‘‘(ii) the national average wage index (as 
so defined) for 2009; and 
‘‘(B) such dollar amount in effect under sub-
paragraph (A) of paragraph (1) for plan years be-
ginning in the preceding calendar year. 
If the amount determined under this paragraph is not a 
multiple of $1, such product shall be rounded to the near-
est multiple of $1.’’. 
(3) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to plans terminating 
or first receiving financial assistance from the Pen-
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295 
sion Benefit Guaranty Corporation (within the 
meaning under section 4261 of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1431)) after the date of the enactment of this Act. 
(b) REQUIRED REPORT.—Section 4022A(f) of such 
Act (29 U.S.C. 1322a(f)) is amended by adding at the 
end the following new paragraph: 
‘‘(5) Notwithstanding any other provision of this sub-
section, the next report required to be submitted to Con-
gress under this subsection after the date of enactment 
of the Pension Guaranty Improvement Act of 2012 shall 
be submitted not later than December 31, 2013.’’. 
(c) ANNUAL PREMIUM RATE.— 
(1) IN GENERAL.—Subparagraph (A) of section 
4006(a)(3) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1306(a)(3)) is amend-
ed— 
(A) by inserting ‘‘and before January 1, 
2012,’’ after ‘‘December 31, 2005,’’ in clause 
(iv), 
(B) by striking ‘‘or’’ at the end of clause 
(iii), 
(C) by striking the period at the end of 
clause (iv) and inserting ‘‘, or’’, and 
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296 
(D) by adding at the end the following new 
clause: 
‘‘(v) in the case of a multiemployer plan, for 
plan years beginning after December 31, 2011, 
$18.00 for each individual who is a participant in 
such plan during the applicable plan year.’’. 
(2) INFLATION ADJUSTMENT.—Paragraph (3) 
of section 4006(a) of such Act (29 U.S.C. 1306(a)) 
is amended by adding at the end the following new 
subparagraph: 
‘‘(I) For each plan year beginning in a calendar year 
after 2011, there shall be substituted for the premium rate 
specified in clause (v) of subparagraph (A) an amount 
equal to the greater of— 
‘‘(i) the product derived by multiplying the pre-
mium rate specified in clause (v) of subparagraph 
(A) by the ratio of— 
‘‘(I) the national average wage index (as 
defined in section 209(k)(1) of the Social Secu-
rity Act) for the first of the 2 calendar years 
preceding the calendar year in which such plan 
year begins, to 
‘‘(II) the national average wage index (as 
so defined) for 2009; and 
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297 
‘‘(ii) the premium rate in effect under clause (v) 
of subparagraph (A) for plan years beginning in the 
preceding calendar year. 
If the amount determined under this subparagraph is not 
a multiple of $1, such product shall be rounded to the 
nearest multiple of $1.’’. 
SEC. 366. IMPROVING SINGLE EMPLOYER PROGRAM SOL-
VENCY. 
(a) FLAT-RATE PREMIUM.— 
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
4006(a)(3)(A) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1306(a)(3)(A)) is 
amended to read as follows: 
‘‘(i) in the case of a single-employer plan, an 
amount for each individual who is a participant in 
such plan during the plan year equal to the sum of 
the additional premium (if any) determined under 
subparagraph (E) and— 
‘‘(I) for plan years beginning after Decem-
ber 31, 2005 and before January 1, 2012, $30; 
‘‘(II) for plan years beginning after De-
cember 31, 2011, and before January 1, 2013, 
$42; 
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298 
‘‘(III) for plan years beginning after De-
cember 31, 2012, and before January 1, 2014, 
$48; and 
‘‘(IV) for plan years beginning after De-
cember 31, 2013, $54;’’. 
(2) ADJUSTMENT
FOR
INFLATION.—Subpara-
graph (F) of section 4006(a)(3) of such Act (29 
U.S.C. 1306(a)(3)) is amended by adding at the end 
the following: ‘‘For each plan year beginning in a 
calendar year after 2011, clause (i)(II) shall be ap-
plied by substituting ‘2009’ for ‘2004’.’’. 
(b) VARIABLE-RATE PREMIUM ADJUSTMENT FOR IN-
FLATION.—Section 4006(a)(3) of such Act (29 U.S.C. 
1306(a)(3)), as amended by section 365, is further amend-
ed by adding at the end the following new subparagraph: 
‘‘(J) For each plan year beginning in a calendar year 
after 2011, there shall be substituted for the premium rate 
specified in clause (ii) of subparagraph (E) an amount 
equal to the greater of— 
‘‘(i) the product derived by multiplying the pre-
mium rate specified in clause (ii) of subparagraph 
(E) by the ratio of— 
‘‘(I) the national average wage index (as 
defined in section 209(k)(1) of the Social Secu-
rity Act) for the first of the 2 calendar years 
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299 
preceding the calendar year in which such plan 
year begins, to 
‘‘(II) the national average wage index (as 
so defined) for 2009; and 
‘‘(ii) the premium rate in effect under clause 
(ii) of subparagraph (E) for plan years beginning in 
the preceding calendar year. 
If the amount determined under this subparagraph is not 
a multiple of $1, such product shall be rounded to the 
nearest multiple of $1.’’. 
Subtitle H—Pension and 
Participant Protection 
SEC. 371. SHORT TITLE. 
This subtitle may be cited as the ‘‘Pension and Par-
ticipant Protect Act’’. 
SEC. 372. FINDINGS. 
Congress makes the following findings: 
(1) The ongoing effects of the financial crisis 
have put enormous stress on the defined benefit pen-
sion system. 
(2) It is in the best interest of plan participants 
for Congress to take immediate steps to relieve that 
stress by ensuring that pension contributions are 
less volatile and more predictable, provided that par-
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300 
ticipants are afforded additional protections should 
their pensions be terminated in bankruptcy. 
(3) It is further in the best interest of partici-
pants for Congress to take future steps to both re-
duce the volatility in pension funding requirements 
and better protect plan participants and retirees 
from loss. 
SEC. 373. PENSION FUNDING STABILIZATION. 
(a) AMENDMENTS TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.— 
(1) IN GENERAL.—Subparagraph (C) of section 
303(h)(2) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1083(h)(2)) is amended 
by adding at the end the following new clause: 
‘‘(iv) 
SEGMENT
RATE
STABILIZA-
TION.— 
‘‘(I) IN GENERAL.—If a segment 
rate described in clause (i), (ii), or 
(iii) with respect to any applicable 
month (determined without regard to 
this clause) is less than the applicable 
minimum percentage, or more than 
the applicable maximum percentage, 
of the average of the segment rates 
described in such clause for years in 
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301 
the 25-year period ending with Sep-
tember 30 of the calendar year pre-
ceding the calendar year in which the 
plan year begins, then the segment 
rate described in such clause with re-
spect to the applicable month shall be 
equal to the applicable minimum per-
centage or the applicable maximum 
percentage of such average, whichever 
is closest. The Secretary of the Treas-
ury shall determine such average on 
an annual basis and may prescribe 
equivalent rates for years in any such 
25-year period for which the rates de-
scribed in any such clause are not 
available. 
‘‘(II) APPLICABLE MINIMUM PER-
CENTAGE; 
APPLICABLE
MAXIMUM 
PERCENTAGE.—For purposes of sub-
clause (I), the applicable minimum 
percentage and the applicable max-
imum percentage for a plan year be-
ginning in a calendar year shall be de-
termined in accordance with the fol-
lowing table: 
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‘‘If the calendar year is: 
The 
applicable 
minimum 
percentage 
is: 
The 
applicable 
maximum 
percentage 
is: 
2012 ........................................................................
90% 
110%
2013 ........................................................................
85% 
115%
2014 ........................................................................
80% 
120%
2015 ........................................................................
75% 
125%
After 2015 ..............................................................
70% 
130%.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subparagraph (F) of section 303(h)(2) 
of such Act (29 U.S.C. 1083(h)(2)) is amended 
by inserting ‘‘and the averages determined 
under subparagraph (C)(iv)’’ after ‘‘subpara-
graph (C)’’. 
(B) Clauses (ii) and (iii) of section 
205(g)(3)(B) 
of 
such 
Act 
(29 
U.S.C. 
1055(g)(3)(B)) are each amended by striking 
‘‘section 303(h)(2)(C)’’ and inserting ‘‘section 
303(h)(2)(C) (determined by not taking into ac-
count any adjustment under clause (iv) there-
of)’’. 
(C) Clause (iv) of section 4006(a)(3)(E) of 
such Act (29 U.S.C. 1306(a)(3)(E)) is amended 
by striking ‘‘section 303(h)(2)(C)’’ and insert-
ing ‘‘section 303(h)(2)(C) (notwithstanding any 
regulations issued by the corporation, deter-
mined by not taking into account any adjust-
ment under clause (iv) thereof)’’. 
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303 
(b) AMENDMENTS TO INTERNAL REVENUE CODE OF 
1986.— 
(1) IN GENERAL.—Subparagraph (C) of section 
430(h)(2) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new 
clause: 
‘‘(iv) 
SEGMENT
RATE
STABILIZA-
TION.— 
‘‘(I) IN GENERAL.—If a segment 
rate described in clause (i), (ii), or 
(iii) with respect to any applicable 
month (determined without regard to 
this clause) is less than the applicable 
minimum percentage, or more than 
the applicable maximum percentage, 
of the average of the segment rates 
described in such clause for years in 
the 25-year period ending with Sep-
tember 30 of the calendar year pre-
ceding the calendar year in which the 
plan year begins, then the segment 
rate described in such clause with re-
spect to the applicable month shall be 
equal to the applicable minimum per-
centage or the applicable maximum 
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305 
mined by not taking into account any adjust-
ment under clause (iv) of subsection (h)(2)(C) 
thereof)’’ before the period. 
(B) Subparagraph (F) of section 430(h)(2) 
of such Code is amended by inserting ‘‘and the 
averages 
determined 
under 
subparagraph 
(C)(iv)’’ after ‘‘subparagraph (C)’’. 
(C) Subparagraphs (C) and (D) of section 
417(e)(3) of such Code are each amended by 
striking ‘‘section 430(h)(2)(C)’’ and inserting 
‘‘section 430(h)(2)(C) (determined by not tak-
ing into account any adjustment under clause 
(iv) thereof)’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply with respect to plan years be-
ginning after December 31, 2011. 
(2) EXCEPTION.—A plan sponsor may elect not 
to have the amendments made by this section apply 
to any plan year beginning on or before the date of 
the enactment of this Act solely for purposes of de-
termining the adjusted funding target attainment 
percentage under sections 436 of the Internal Rev-
enue Code of 1986 and 206(g) of the Employee Re-
tirement Income Security Act of 1974 for such plan 
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306 
year, provided that the plan sponsor made such de-
termination in good faith and without an intent to 
trigger any statutorily required restrictions on bene-
fits. A plan shall not be treated as failing to meet 
the requirements of sections 411(d)(6) of such Code 
and 204(g) of such Act solely by reason of an elec-
tion under this paragraph. 
SEC. 374. CONGRESSIONAL COMMITMENT TO ENCOUR-
AGING PENSIONS. 
Not later than December 31, 2012, the Committee 
on Health, Education, Labor, and Pensions of the Senate 
and the Committee on Education and the Workforce of 
the House of Representatives shall issue a report pro-
viding recommendations to improve and expand the de-
fined benefit pension system. Such report shall include 
recommendations concerning— 
(1) measures to further stabilize pension con-
tribution rates; 
(2) additional or expanded options to improve 
pension funding flexibility for plan sponsors suf-
fering a temporary business hardship; 
(3) incentives for plans sponsors to establish or 
maintain pension plans permitting new entrants and 
to encourage plan sponsors to unfreeze their pension 
plans; and 
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307 
(4) modifications to the pension guaranty sys-
tem and bankruptcy law necessary or appropriate to 
protect plan participants and retirees from inequi-
table treatment. 
SEC. 375. PARTICIPANT PROTECTION IN BANKRUPTCY. 
Sections 4022(g) and 4044(e) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1322(g) 
and 1344(e)), as added by section 404 of the Pension Pro-
tection Act of 2006, are repealed as of October 1, 2011, 
and shall not apply with respect to proceedings initiated 
under title 11, United States Code, or under any similar 
Federal law or law of a State or political subdivision, on 
or after such date. 
Subtitle I—Fair Playing Field 
SEC. 381. SHORT TITLE; FINDINGS; PURPOSES. 
(a) SHORT TITLE.—This subtitle may be cited as the 
‘‘Fair Playing Field Act of 2012’’. 
(b) FINDINGS.—Congress makes the following find-
ings: 
(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 
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308 
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 meas-
ure 
protecting 
taxpayers 
from 
liability 
for 
misclassification if the taxpayer has a reasonable 
basis for classifying a worker as an independent con-
tractor and meets certain other conditions. In addi-
tion, the Act prohibited the Secretary of the Treas-
ury from publishing regulations or revenue rulings 
on workers’ employment tax status pending the ex-
pected near-term enactment of clarifying legislation. 
(3) During the ensuing 33 years, Congress 
made section 530 of the Revenue Act of 1978 per-
manent, however, changes in working relationships 
and the continued prohibition on new guidance have 
increased the uncertainty as to the proper classifica-
tion 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, 
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309 
and may also result in misclassification for other 
purposes, such as denial of unemployment benefits, 
workplace health and safety protections, and retire-
ment or other benefits or protections available to 
employees. 
(5) Workers, businesses, and other taxpayers 
will benefit from clear guidance regarding employ-
ment tax status. In the interest of fairness and in 
view of many service recipients’ reliance on current 
section 530, such guidance should apply only pro-
spectively. 
(c) PURPOSES.—The purposes of this subtitle 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. 
SEC. 382. AUTHORITY TO ISSUE GUIDANCE CLARIFYING 
EMPLOYMENT STATUS FOR PURPOSES OF 
EMPLOYMENT TAXES. 
(a) IN GENERAL.—Chapter 25 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new section: 
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310 
‘‘SEC. 3511. 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 em-
ployment status of individuals for purposes of any tax im-
posed by this subtitle. 
‘‘(b) 
PROHIBITION
ON
RETROACTIVE
ASSESS-
MENTS.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) for purposes of any tax imposed by 
this subtitle, the taxpayer did not treat an indi-
vidual as an employee for any period before the 
reclassification date with respect to such indi-
vidual, 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 tax-
payer’s treatment of such individual as not 
being an employee, 
then, for purposes of applying such taxes for periods 
before such reclassification date with respect to the 
taxpayer, the individual shall be deemed not to be an 
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311 
employee unless the taxpayer had no reasonable 
basis for not treating such individual as an em-
ployee. 
‘‘(2) STATUTORY STANDARDS PROVIDING ONE 
METHOD
OF
SATISFYING
THE
REQUIREMENTS
OF 
PARAGRAPH (1).—For purposes of paragraph (1), 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 re-
liance 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 as-
sessment attributable to the treatment (for pur-
poses of any tax imposed by this subtitle) of the 
individuals holding positions substantially simi-
lar 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. 
‘‘(3) CONSISTENCY REQUIRED IN THE CASE OF 
PRIOR TAX TREATMENT.—Paragraph (1) shall not 
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312 
apply with respect to the treatment of any individual 
(hereafter in this paragraph referred to as the re-
classified individual) for purposes of any tax im-
posed by this subtitle for any period ending after 
December 31, 1978, if the taxpayer (or a prede-
cessor) has treated any individual holding a substan-
tially similar position as an employee for purposes of 
any tax imposed by this subtitle for any period be-
ginning after December 31, 1977, and ending before 
the reclassification date with respect to such reclas-
sified individual. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) RECLASSIFICATION DATE.— 
‘‘(A) IN GENERAL.—The term ‘reclassifica-
tion 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 indi-
vidual, or 
‘‘(ii) the effective date of the first ap-
plicable final regulation issued by the Sec-
retary under subsection (a) with respect to 
such individual (or, if later, the first day of 
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313 
the first calendar quarter beginning more 
than 180 days after such regulation is 
issued). 
‘‘(B) EMPLOYEE CLASSIFICATION DETER-
MINATION.—The term ‘employee classification 
determination’ means, with respect to any indi-
vidual, a determination by the Secretary, in 
connection with an audit of the taxpayer which 
is described in section 7436 and which com-
mences 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 REGULA-
TION.—The term ‘first applicable final regula-
tion’ means, with respect to any individual, the 
first final regulation (or other guidance of gen-
eral applicability) which sets forth the factors 
for determining the employment status of a 
class of individuals holding positions substan-
tially similar to the position held by such indi-
vidual. 
‘‘(2) EMPLOYMENT
STATUS.—The term ‘em-
ployment status’ means the status of an individual, 
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314 
under the usual common law rules applicable in de-
termining 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 WORK-
ERS.—Subsection (b) shall not apply in the case of 
an individual who, pursuant to an arrangement be-
tween the taxpayer and another person, provides 
services for such other person as an engineer, de-
signer, drafter, computer programmer, systems ana-
lyst, 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 Serv-
ice 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 STAND-
ARDS.—For purposes of subsection (b)(2)— 
‘‘(A) a taxpayer may not rely on an audit 
commenced after December 31, 1996, for pur-
poses of subparagraph (B) thereof unless such 
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315 
audit included an examination for purposes of 
any tax imposed by this subtitle whether the in-
dividual involved (or any individual holding a 
position substantially similar to the position 
held by the individual involved) should be treat-
ed as an employee of the taxpayer, 
‘‘(B) in no event shall the significant seg-
ment requirement of subparagraph (C) thereof 
be construed to require a reasonable showing of 
the practice of more than 25 percent of the in-
dustry (determined by not taking into account 
the taxpayer), and 
‘‘(C) in applying the long-standing recog-
nized 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.—Noth-
ing in this section shall be construed to provide that 
subsection (b) only applies where the individual in-
volved is otherwise an employee of the taxpayer. 
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‘‘(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 pur-
poses of subsection (b), and 
‘‘(ii) the taxpayer has fully cooperated 
with reasonable requests from the Sec-
retary, 
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)(2). 
‘‘(6) PRESERVATION
OF
PRIOR
PERIOD
SAFE 
HARBOR.—If— 
‘‘(A) an individual would (but for the 
treatment referred to in subparagraph (B)) be 
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317 
deemed not to be an employee of the taxpayer 
under subsection (b) for any prior period, and 
‘‘(B) such individual is treated by the tax-
payer as an employee for purposes of the taxes 
imposed by this subtitle for any subsequent pe-
riod, 
then, for purposes of applying such taxes for such 
prior period with respect to the taxpayer, the indi-
vidual 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 individ-
uals. 
‘‘(8) TREATMENT OF TEST ROOM SUPERVISORS 
AND PROCTORS WHO ASSIST IN THE ADMINISTRA-
TION
OF
COLLEGE
ENTRANCE
AND
PLACEMENT 
EXAMS.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual described in subparagraph (B) who is 
providing services as a test proctor or room su-
pervisor by assisting in the administration of 
college entrance or placement examinations, 
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318 
subsection (b) shall be applied to such services 
performed after December 31, 2006 (and remu-
neration paid for such services) without regard 
to paragraph (3) thereof. 
‘‘(B) APPLICABILITY.—An individual is de-
scribed in this subparagraph if the individual— 
‘‘(i) is providing the services described 
in subsection (b) to an organization de-
scribed 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 im-
posed by the Federal Government, any State govern-
ment, or a governing body pursuant to a delegation 
by a Federal or State agency. 
‘‘(e) STATEMENTS
TO
INDEPENDENT
CONTRAC-
TORS.— 
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319 
‘‘(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 obli-
gations of an independent contractor, the labor and 
employment law protections that do not apply to 
independent contractors, and the right of such inde-
pendent contractor to seek a status determination 
from the Internal Revenue Service. 
‘‘(2) INDEPENDENT
CONTRACTOR.—For pur-
poses of this subsection, the term ‘independent con-
tractor’ means any individual who is not treated as 
an employee by the person receiving the services re-
ferred to in paragraph (1). 
‘‘(3) TIMING OF STATEMENT.—Except as other-
wise provided by the Secretary, the statement re-
quired under paragraph (1) shall be provided within 
a reasonable period of entering into the contract re-
ferred to in paragraph (1). 
‘‘(4) DEVELOPMENT OF MODEL STATEMENT.— 
The Secretary shall develop model materials for pro-
viding the statement required under paragraph 
(1).’’. 
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320 
(b) REDUCED PENALTY NOT APPLICABLE IN CASES 
OF NONCOMPLIANCE WITH GUIDANCE WITHOUT REA-
SONABLE 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 insert-
ing ‘‘, 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 
3511(a) and the taxpayer lacks a reasonable basis 
for treating the individual as other than an em-
ployee. 
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 an-
other individual who holds a position with the taxpayer 
substantially similar to the position held by such indi-
vidual) 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 
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321 
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 treat-
ment.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 6724(d) of the In-
ternal 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 in-
serting ‘‘, or’’, and by inserting after subparagraph 
(HH) the following new subparagraph: 
‘‘(II) section 3511(e) (relating to state-
ments to independent contractors).’’. 
(2) Paragraph (2) of section 7436(a) of such 
Code is amended by striking ‘‘subsection (a) of sec-
tion 530 of the Revenue Act of 1978’’ and inserting 
‘‘section 3511(b)’’. 
(3) The table of sections for chapter 25 of such 
Code is amended by adding at the end the following 
new item: 
‘‘Sec. 3511. Authority to issue guidance clarifying employment status.’’. 
(d) TERMINATION OF SECTION 530 OF THE REV-
ENUE ACT OF 1978.—The Revenue Act of 1978 is amend-
ed by striking section 530. 
(e) REPORTS ON WORKER MISCLASSIFICATION.—Be-
ginning with the first fiscal year beginning after the date 
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the first regulation or other guidance is issued for public 
comment under section 3511(a) of the Internal Revenue 
Code of 1986 (as added by this section): 
(1) A report each fiscal year on worker classi-
fication which shall include the total number of ex-
aminations of employers initiated because of sus-
pected 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 reclassi-
fied as a result of these actions, the number of re-
quests 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 sta-
tistically valid data is compiled and interpreted on 
worker classification, prepared on the basis of infor-
mation 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 em-
ployers misclassifying workers, the number of work-
ers misclassified, the industries involved, data inter-
pretations and conclusions, and a description of the 
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impact of improper worker classification on the em-
ployment tax gap. 
(f) EFFECTIVE DATES.— 
(1) DELAYED
EFFECTIVE
DATE
OF
REGULA-
TIONS AND GUIDANCE.—Except as provided in para-
graph (2), any regulation or other guidance issued 
under section 3511(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) TREATMENT OF SECURITIES BROKER DEAL-
ERS.—Paragraph (9) of section 3511(d) of the In-
ternal Revenue Code of 1986, as added by this sec-
tion, shall apply to services performed after Decem-
ber 31, 1997. 
(3) AUTHORITY TO ISSUE REGULATIONS AND 
GUIDANCE IMMEDIATELY.—So much of the amend-
ment made by subsection (d) 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. 
(4) DELAYED TERMINATION OF REMAINDER OF 
SECTION 530 OF THE REVENUE ACT OF 1978.—Ex-
cept as provided in paragraph (3), the amendments 
made by subsections (c)(1) and (d) shall apply to 
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324 
services rendered on or after the date which is 1 
year after the date of the enactment of this Act. 
TITLE IV—REBUILD AMERICA 
TRUST FUND 
SEC. 401. ESTABLISH REBUILD AMERICA TRUST FUND. 
(a) IN GENERAL.—Subchapter A of chapter 98 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new section: 
‘‘SEC. 9512. REBUILD AMERICA TRUST FUND. 
‘‘(a) CREATION OF TRUST FUND.—There is estab-
lished in the Treasury of the United States a trust fund 
to be known as the ‘Rebuild America Trust Fund’, con-
sisting of such amounts as may be appropriated or cred-
ited to such fund as provided in this section or section 
9602(b). 
‘‘(b) TRANSFERS TO TRUST FUND.—There are here-
by appropriated to the Rebuild America Trust Fund 
amounts equivalent to the revenues resulting from the 
amendments made by title III of the Rebuild America Act. 
‘‘(c) AUTHORITY TO BORROW.— 
‘‘(1) IN GENERAL.—There are authorized to be 
appropriated to the Rebuild America Trust Fund, as 
repayable advances, such sums as may be necessary 
to carry out the other purposes of the Rebuild Amer-
ica Act as described in subsection (d)(2). 
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325 
‘‘(2) LIMITATION ON AGGREGATE ADVANCES.— 
The maximum aggregate amount of repayable ad-
vances to the Rebuild America Trust Fund which is 
outstanding at any one time shall not exceed an 
amount equal to the amount which the Secretary es-
timates will be equal to the sum of the amounts ap-
propriated to the Rebuild America Trust Fund 
under subsection (b) during the following 60 
months. 
‘‘(3) REPAYMENT OF ADVANCES.— 
‘‘(A) IN GENERAL.—Advances made to the 
Rebuild America Trust Fund shall be repaid, 
and interest on such advances shall be paid, to 
the general fund of the Treasury when the Sec-
retary determines that moneys are available for 
such purposes in the Rebuild America Trust 
Fund. 
‘‘(B) FINAL
REPAYMENT.—No advance 
shall be made to the Rebuild America Trust 
Fund after September 30, 2022, and all ad-
vances to such Trust Fund shall be repaid on 
or before September 30, 2024. 
‘‘(C) RATE OF INTEREST.—Interest on ad-
vances made to the Rebuild America Trust 
Fund shall be at a rate determined by the Sec-
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326 
retary of the Treasury (as of the close of the 
calendar month preceding the month in which 
the advance is made) to be equal to the current 
average market yield on outstanding marketable 
obligations of the United States with remaining 
periods to maturity comparable to the antici-
pated period during which the advance will be 
outstanding and shall be compounded annually. 
‘‘(d) EXPENDITURES.— 
‘‘(1) IN
GENERAL.—Amounts in the Rebuild 
America Trust Fund shall be available, without fur-
ther appropriation— 
‘‘(A) to transfer to accounts specified by, 
and to carry out the provisions of, section 103 
of the Rebuild America Act, and 
‘‘(B) as provided for in the Rebuild Amer-
ica Act (and the amendments made by that 
Act). 
‘‘(2) ALLOCATION OF FUNDS.—The Secretary 
shall allocate funds from the Rebuild America Trust 
Fund to the responsible Departments for distribu-
tion to the States and subdivisions within 15 days 
of the beginning of each fiscal year as set in section 
103 of the Rebuild America Act. Each Secretary of 
such a Department shall allocate the funds set by 
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327 
formula to the States or local receiving entities with-
in 90 days of the beginning of such fiscal year. 
‘‘(3) ADMINISTRATIVE FUNDS.—The portion of 
funds allowed for administrative costs for any ac-
count may not exceed the percentage used for ad-
ministering those funds at both the Federal and the 
State levels under the underlying regular program 
that is in effect for the latest appropriations meas-
ure expiring at the end of a fiscal year. 
‘‘(4) MAINTENANCE OF EFFORT.— 
‘‘(A) FEDERAL
LEVEL.—The funds pro-
vided from the Rebuild America Trust Fund 
shall not be provided by the Secretary to an ac-
count if the appropriations for that account are 
to be funded at not less than the sum provided 
in fiscal year 2012, not including emergency 
funds. 
‘‘(B) STATE LEVEL.—A State or local gov-
ernment shall not receive funds for an account 
provided by the Rebuild America Trust Fund 
unless that State maintains the same level of 
funding for that function as the State and local 
governments provided in State fiscal year 2011. 
The Secretary shall, by rule define the State 
programs representing the function for each ac-
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count for which funds are provided by the 
Trust Fund. 
‘‘(5) USE OF AMERICAN IRON, STEEL, MANU-
FACTURED GOODS, AND EQUIPMENT.— 
‘‘(A) IN
GENERAL.—None of the funds 
made available by the Rebuild America Trust 
Fund may be used for a project for the con-
struction, alteration, maintenance, or repair of 
a public building or public work unless all of 
the iron, steel, manufactured goods, and equip-
ment used in the project are produced in the 
United States. 
‘‘(B) 
EXCEPTIONS.—Subparagraph 
(A) 
shall not apply in any case or category of cases 
in which the head of the Federal department or 
agency involved finds that— 
‘‘(i) applying subparagraph (A) would 
be inconsistent with the public interest, 
‘‘(ii) iron, steel, the relevant manufac-
tured goods, or the relevant equipment are 
not produced in the United States in suffi-
cient and reasonably available quantities 
and of a satisfactory quality, or 
‘‘(iii) inclusion of iron, steel, manufac-
tured goods, and equipment produced in 
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the United States will increase the cost of 
the overall project by more than 25 per-
cent. 
‘‘(C) PUBLICATION OF JUSTIFICATION.—If 
the head of a Federal department or agency de-
termines that it is necessary to waive the appli-
cation of subparagraph (A) based on a finding 
under subparagraph (B), the head of the de-
partment or agency shall publish in the Federal 
Register a detailed written justification as to 
why the provision is being waived. 
‘‘(D) CONSISTENCY WITH INTERNATIONAL 
AGREEMENTS.—This paragraph shall be applied 
in a manner consistent with United States obli-
gations under international agreements. 
‘‘(6) WAGE
RATE
REQUIREMENTS.—Notwith-
standing any other provision of law and in a manner 
consistent with other provisions in this section and 
in the Rebuild America Act, all laborers and me-
chanics employed by contractors and subcontractors 
on projects funded directly by or assisted in whole 
or in part by and through the Federal Government 
pursuant to funds made available by the Rebuild 
America Act shall be paid wages at rates not less 
than those prevailing on projects of a character simi-
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330 
lar in the locality as determined by the Secretary of 
Labor in accordance with subchapter IV of chapter 
31 of title 40, United States Code. With respect to 
the labor standards specified in this paragraph, the 
Secretary of Labor shall have the authority and 
functions set forth in Reorganization Plan Num-
bered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) 
and section 3145 of title 40, United States Code.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for subchapter A of chapter 98 of such Code is 
amended by adding at the end the following new item: 
‘‘Sec. 9512. Rebuild America Trust Fund.’’. 
Æ 
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