Instructions: In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.
Input: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Independent Contractor Tax Fairness
Act of 1995''.

SEC. 2. CLARIFICATION OF EMPLOYMENT STATUS OF CERTAIN INDIVIDUALS;
CODIFICATION OF SECTION 530 SAFE HARBOR RULES.

(a) General Rule.--Chapter 25 of the Internal Revenue Code of 1986
(relating to general provisions applicable to employment taxes) is
amended by adding at the end the following new section:

''SEC. 3510. DETERMINATION OF EMPLOYMENT STATUS.

''(a) Certain Individuals Not Treated As Employees.--
''(1) In general.--For purposes of this title, in the case
of an individual who meets the requirements of one of the
subparagraphs of paragraph (2) and who performs services
pursuant to a qualified agreement--
''(A) such individual shall not be treated as an
employee, and
''(B) the person for whom such services are
performed (hereafter in this subsection referred to as
the 'service-recipient') shall not be treated as an
employer.
''(2) Requirements.--
''(A) Realization of profit or loss.--An individual
meets the requirements of this subparagraph if the
individual can realize a profit or loss as a result of
the individual's services (in addition to the profit or
loss ordinarily realized by employees) performed for
the service-recipient.
''(B) Separate principal place of business.--An
individual meets the requirements of this subparagraph
if the individual--
''(i) maintains his principal place of
business other than at a place of business of
the service-recipient, and
''(ii) has a significant investment in
facilities or tools which are used by such
individual to perform services of the type
performed for the service-recipient and which
are not typically maintained by employees.
''(C) Making services available to the general
public.--An individual meets the requirements of this
subparagraph if--
''(i) the services performed by the
individual for the service-recipient are made
available to the general public on a regular
and consistent basis, and
''(ii) the individual has performed such
services other than as an employee (determined
without regard to this subparagraph) for at
least 1 other service-recipient during such
year or the preceding calendar year.
''(D) Paid on commission basis, etc.--An individual
meets the requirements of this subparagraph if--
''(i) the individual is paid exclusively on
a commission basis, and
''(ii)(I) maintains his principal place of
business other than at a place of business of
the service-recipient, or
''(II) pays fair market rental value for
his principal place of business if such place
is at a place of business of the service-
recipient.
''(3) Qualified agreement.--For purposes of this
subsection, the term 'qualified agreement' means a written
agreement--
''(A) which specifies the services to be provided,
the duration those services are to be provided, and the
remuneration to be paid for those services,
''(B) which specifies that--
''(i) the service provider reasonably
believes that such provider meets the
requirements under this section for being
treated not as an employee with respect to such
services and will not be treated by the
service-recipient as an employee with respect
to such services for Federal tax purposes, and
''(ii) the service provider is aware of the
Federal tax obligations resulting from such
treatment, and
''(C) which specifies that the service-recipient
will maintain a separate accounting of the income and
expenses related to such agreement.
''(4) Consequence of failing to meet test.--Failure to meet
the requirements of this subsection shall not be construed as
indicating that an individual is an employee of the service-
recipient for purposes of this title.
''(b) Termination of Certain Employment Tax Liability.--
''(1) In general.--If--
''(A) for purposes of employment taxes, the
taxpayer did not treat an individual as an employee for
any period, and
''(B) in the case of periods after December 31,
1978, 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 taxpayer's treatment of
such individual as not being an employee,
then for purposes of applying such taxes for such period with
respect to the taxpayer, the individual shall be deemed not to
be an employee unless the taxpayer had no reasonable basis for
not treating such individual as an employee.
''(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 reliance 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 assessment attributable
to the treatment (for employment tax purposes) of the
individuals holding positions substantially similar to
the position held by this individual.
''(C) Long-standing recognized practice of a
significant segment of the industry in which such
individual was engaged.
''(3) Subsequent treatment by taxpayer of individual as an
employee.--If--
''(A) an individual is deemed not to be an employee
of the taxpayer under paragraph (1) for any prior
period, and
''(B) such individual is treated by the taxpayer as
an employee for employment tax purposes for any
subsequent period,
then, notwithstanding paragraph (1), for purposes of applying
such taxes for such prior period with respect to the taxpayer,
the individual shall be deemed not to be an employee.
''(4) Prospective termination of prior audit safe harbor.--
''(A) In general.--If, after an employment tax
audit (and after providing the taxpayer an opportunity
for an appeal within the Internal Revenue Service), the
taxpayer is notified in writing by the Internal Revenue
Service that an individual (or individuals holding
substantially similar positions) should be treated as
employees for purposes of the employment taxes,
paragraph (2)(B) shall not apply with respect to such
individuals for any calendar month beginning more than
180 days after the date such notice is sent. The
preceding sentence shall not apply if the audit
referred to paragraph (2)(B) included an examination
for employment tax purposes of individuals holding
positions substantially similar to the positions held
by the individual involved.
''(B) Employment tax audit.--For purposes of
subparagraph (A), the term 'employment tax audit' means
any audit by the Internal Revenue Service which--
''(i) was conducted solely for employment
tax purposes, and
''(ii) included an examination for
employment tax purposes of individuals holding
positions substantially similar to the
positions held by the individual involved.
''(5) Clarification of significant segment of industry.--In
no event shall the 'significant segment' requirement under
paragraph (2)(C) be interpreted to require a showing of the
practice of more than 25 percent of an industry. In applying
the preceding sentence, the Secretary shall allow taxpayers
maximum latitude in determining which industry is the
appropriate industry for purposes of applying such paragraph to
the taxpayer.
''(c) Definitions.--For purposes of this section--
''(1) Employment tax.--The term 'employment tax' means any
tax imposed by this subtitle.
''(2) Employment status.--The term 'employment status'
means the status of an individual, under the usual common law
rules applicable in determining the employer-employee
relationship, as an employee or as an independent contractor
(or other individual who is not an employee).''
(b) Rules To Apply for Income Tax Purposes.--Part I of subchapter B
of chapter 1 of such Code is amended by adding at the end the following
new section:

''SEC. 69. DETERMINATION OF EMPLOYMENT STATUS.

''For purposes of this subtitle, an individual shall not be treated
as an employee of a person for any period if, under the rules of
section 3510, such individual is treated as not being an employee of
such person for such period.''
(c) Conforming Amendment.--Section 530 of the Revenue Act of 1978
is hereby repealed.
(d) Clerical Amendments.--
(1) The table of sections for chapter 25 of such Code is
amended by adding at the end the following new item:

''Sec. 3510. Determination of employment
status.''
(2) The table of sections for part I of subchapter B of
chapter 1 of such Code is amended by adding at the end the
following new item:

''Sec. 69. Determination of employment
status.''
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect beginning on
the first day of the first calendar year beginning after the
date of the enactment of this Act.
(2) Repeal of section 530.--The amendment made by
subsection (c) shall apply to periods in calendar years
beginning after the date of the enactment of this Act.
(3) Consistency rules.--In determining whether the
requirements of subsection (b)(1)(B) of section 3510 of the
Internal Revenue Code of 1986 (as added by subsection (a)) are
met with respect to any individual described in section 530(d)
of the Revenue Act of 1978 (as in effect on the day before the
date of the enactment of this Act), there shall be disregarded
any period for which such individual (or any other individual
holding a substantially similar position) was treated as an
employee by reason of such section 530(d).

SEC. 3. COMPLIANCE PROVISIONS.

(a) Increase in Penalty on Service-Recipient for Failure To Furnish
Form 1099's to Independent Contractors.--
(1) In general.--Section 6722 of the Internal Revenue Code
of 1986 (relating to failure to file correct payee statements)
is amended by adding at the end the following new subsection:
''(d) Increase in Penalty With Respect to Statements for
Services.--In the case of any statement required by section 6041(d) or
section 6041A(e) to show payments for services, subsection (a) shall be
applied by substituting '$75' for '$50' and subsection (c) shall be
applied by substituting '$125' for '$100'.''
(2) Effective date.--The amendment made by paragraph (1)
shall apply to statements the due date for which (determined
without regard to extensions) is after December 31, 1996.
(b) Separate Listing of Payments Reported on Form 1099's.--The
Secretary of the Treasury or his delegate shall modify the forms for
returns of income tax so as to require the reporting for information
purposes on a separate line of each amount for which the taxpayer
received a statement under section 6041(d) or section 6041A(e) showing
payments for services.
(c) Information to Service-Recipients With Respect to Independent
Contractors.--The Secretary of the Treasury or his delegate shall take
such steps as the Secretary determines appropriate to inform service-
recipients of--
(1) their obligations with respect to independent
contractors,
(2) the modifications made by this Act in the rules for
determining whether or not an individual is an employee, and
(3) the increase made by this Act in the penalties for
failures to furnish correct statements required by sections
6041(d) and section 6041A(e) of the Internal Revenue Code of
1986.

SEC. 4. DEPARTMENT OF THE TREASURY REQUIRED TO PROPOSE LEGISLATION.

Not later than the date which is 180 days after the date of the
enactment of this Act, the Secretary of the Treasury or his delegate
shall submit a report to the Congress proposing legislation which
specifies objectively measurable criteria for determining whether an
individual (not otherwise treated as not being an employee under
section 3508 or 3510(a) of the Internal Revenue Code of 1986) is an
employee for purposes of such Code. It is the intent of the Congress
that such criteria allow taxpayers maximum latitude in determining
employment status.

SEC. 5. REPORT ON LATITUDE GIVEN TAXPAYERS IN DETERMINING EMPLOYMENT
STATUS.

Not later than the date which is 1 year after the date of the
enactment of this Act, the Secretary of the Treasury or his delegate
shall submit a report to the Congress detailing the efforts being made
by the Department of the Treasury in giving taxpayers maximum latitude
in determining employment status under section 3510 of the Internal
Revenue Code of 1986.
Output:
Independent Contractor Tax Fairness Act of 1995 - Amends the Internal Revenue Code to provide for determining the employment status of individuals as employees for purposes of employment taxes. Requires a written qualified agreement in order for an individual who performs services for another (the service-recipient) to not be treated as an employee and sets forth the following conditions, of which at least one must be met, for the individual to not be treated as an employee and the service-recipient to not be treated as an employer: (1) the individual can realize a profit or loss as a result of services performed for the service-recipient; (2) the individual maintains a separate principal place of business and has a significant investment in facilities or tools, which are not typically maintained by employees, used to perform services; (3) the services performed by the individual are available to the general public and the individual has performed such services other than as an employee for at least one other service-recipient during the year or the preceding calendar year; or (4) the individual is paid exclusively on a commission basis and maintains his or her principal place of business other than at the service recipient's place of business or pays fair market rental value for his or her principal place of business if such place is the service-recipient's place of business. Requires the qualified agreement to specify, among other things: (1) which services will be provided, the duration of such services, and the remuneration to be paid for such services; (2) that the service provider is aware of his or her Federal tax obligations; and (3) that the service-recipient will maintain a separate accounting of the income and expenses related to such agreement.
Codifies section 530 of the Revenue Act of 1978, with revisions.
Increases the penalty on service-recipients for failure to furnish information returns on services performed by independent contractors.
Requires the Secretary of the Treasury to propose legislation to the Congress which specifies objectively measurable criteria for determining whether an individual is an employee. Declares the intent of the Congress that such criteria allow taxpayers maximum latitude in determining employment status.
Requires the Secretary to report to the Congress on efforts being made to give taxpayers such latitude.