February 10, 2010

Uncle Sam wants a closer look at your 1099

Your status as an independent contractor will face greater scrunity in the coming years if the federal government has its way.

Several states are already strengthening their classification laws for workers. Now the Obama Adminstration would like give the movement more firepower. In his proposed 2011 budget is a $25 million “Misclassification Initiative.” It would allow the Department of Labor to hire more personnel to investigate classification cases, as well as seed grants for states to address the issue.

Already in Congress are committee bills (both the House and Senate) that would kill Section 530 of the Revenue Act of 1978 or the “safe harbor” provision of the tax law and offer stricter regulations for employers when hiring independent contractors.

Most recent was Sen. John Kerry’s (D-Mass) introduction of the Taxpayer Responsibility Accountability and Consistency Act of 2009  or S.2882 in December. This past summer Rep. Jim McDermott (D-Wash.)  introduced H.R. 3408.

As a senator Obama introduced a similar bill, which died when the congressional slate was wiped clean. We could see elements of his bill and similar bills from the past, along with the current propopals, for a comprehensive overhaul of the independent contractor classification regulations.

For additional background information on the independent contractor debate, see our April 2009 cover story. And watch for more updates in Truckers News magazine and at www.truckersnews.com