I 
114TH CONGRESS 
2D SESSION 
H. R. 5008 
To direct the Secretary of the Treasury to improve tax compliance in the 
construction industry, including clarifying the employment status of serv-
ice providers in the construction industry, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 20, 2016 
Mr. MACARTHUR (for himself and Mr. KIND) introduced the following bill; 
which was referred to the Committee on Ways and Means 
A BILL 
To direct the Secretary of the Treasury to improve tax 
compliance in the construction industry, including clari-
fying the employment status of service providers in the 
construction industry, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; FINDINGS; PURPOSES. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Clarify Workers Misclassification in the Construction In-
dustry Act’’. 
(b) FINDINGS.—Congress makes the following find-
ings: 
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(1) Worker misclassification in the construction 
industry has reached epidemic proportions. Studies 
from California, Tennessee, Florida, Texas, New 
Jersey, and other States detail hundreds of millions 
of dollars in lost employment and income taxes be-
cause of improper classification of workers for tax-
ation in the construction industry. New Jersey rev-
enue collection officials have indicated that $535 
million in taxes in the State are lost due to worker 
misclassification. 
(2) Worker misclassification takes place at con-
struction projects involving military bases, hospitals, 
universities, convention centers, and major hotels. 
(3) There is significant anecdotal evidence that 
a large number of workers in the construction indus-
try are currently being misclassified as independent 
contractors in order to avoid tax withholding and 
other employer responsibilities, but the Internal Rev-
enue Service is barred from issuing rules or guid-
ance to reclassify these workers by section 530 of 
the Revenue Act of 1978. 
(4) Legitimate construction contractors are un-
able to compete with contractors who avoid employ-
ment and income taxes through misclassification. 
This creates competitive pressure on other contrac-
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tors to also misclassify employees to remain competi-
tive. States, leading contractors, and construction 
labor leaders agree that government action is needed 
to reverse this spiral. 
(5) According to the Internal Revenue Service, 
a dollar spent on tax enforcement typically yields an 
additional six dollars in revenue to the Treasury. 
This figure does not include revenue gained from de-
terring misclassification which would increase tax 
revenue significantly beyond the level projected. 
(c) PURPOSES.—The purposes of this Act are to in-
crease efforts to identify and reduce misclassification, to 
prosecute tax evasion in the construction industry, and 
provide the Secretary of the Treasury the resources nec-
essary to accomplish these objectives. 
SEC. 2. DIRECTIVES AND AUTHORITIES TO IMPROVE TAX 
COMPLIANCE IN THE CONSTRUCTION INDUS-
TRY. 
(a) ENFORCEMENT ACTIONS.—The Secretary of the 
Treasury shall initiate an enforcement initiative aimed at 
increasing tax compliance in the construction industry. 
Measures taken to implement this initiative shall include: 
(1) Consultations with industry experts and 
leaders on the scope and priorities of this initiative, 
including the Secretary of Labor, State government 
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officials, the General Accountability Office, leading 
private sector construction organizations, and labor 
organizations involved in the construction industry. 
(2) Targeted tax audits of major construction 
contractors that the Secretary finds reason to believe 
may not be in compliance with applicable Federal 
tax laws. 
(3) Civil and criminal tax enforcement actions 
under existing legal authorities. 
(4) Educational efforts aimed at entities in the 
construction industry to increase voluntary tax com-
pliance. 
(b) AUTHORITY TO ISSUE GUIDANCE CLARIFYING 
EMPLOYMENT STATUS FOR PURPOSES OF EMPLOYMENT 
TAXES.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law including section 530 of the Rev-
enue Act of 1978, the Secretary shall promulgate 
rules and issue guidance to reclassify individuals 
who are not currently being treated as employees 
consistent with the proper classification of employees 
under common law standards within the construc-
tion industry. 
(2) RESTRICTION
TO
CONSTRUCTION
INDUS-
TRY.—Any rules or guidance under paragraph (1) 
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shall apply only with respect to services provided 
within the construction industry. 
(3) EFFECTIVE DATE.—Any rules or guidance 
under paragraph (1) shall not take effect before the 
date which is 180 days after the date of the enact-
ment of this Act. 
(c) RESOURCES.—The Secretary shall reassign per-
sonnel and resources from other activities to carry out this 
Act. 
(d) OVERSIGHT AND REVIEW.— 
(1) ANNUAL
REPORTS
BY
TREASURY.—The 
Secretary shall submit an annual written report to 
the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of 
the Senate regarding the implementation of this Act 
together with any recommendations for further ac-
tion by Congress which would be consistent with the 
purposes of this Act. 
(2) STUDY
AND
REPORT
BY
COMPTROLLER 
GENERAL.—The Comptroller General of the United 
States shall conduct a comprehensive study of the 
various forms of tax fraud, including employee 
misclassification, in the construction industry, ef-
forts to combat such fraud, and recommendations 
for further action. Not later than June 30, 2017, 
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the Comptroller General shall submit a written re-
port to the Committee on Ways and Means of the 
House of Representatives and the Committee on Fi-
nance of the Senate detailing the results of such 
study. 
(e) DEFINITIONS.—For purposes of this section— 
(1) 
CONSTRUCTION
INDUSTRY.—The 
term 
‘‘construction industry’’ means all general contrac-
tors and operative builders primarily engaged in the 
remodeling, addition, or construction of residential, 
farm, industrial, commercial, or other buildings in-
cluding wharves or other structures attached to land. 
(2) SECRETARY
OF
THE
TREASURY.—The 
terms ‘‘Secretary of the Treasury’’ and ‘‘Secretary’’ 
mean the Secretary of the Treasury or the Sec-
retary’s designee. 
(f) TERMINATION.—This section, and any rules pro-
mulgated or guidance issued under subsection (b), shall 
cease to have any force or effect after September 30, 
2021. 
Æ 
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