We recently noted that the President’s budget included an item calling for the repeal of the Section 530 “safe harbor” for independent contractor status determination, and on March 1, Sen. John Kerry (D-Massachusetts) reintroduced his Fair Playing Field Act (S 2145) in the Senate, while Rep. Jim McDermott (D-Washington) reintroduced identical legislation in the House. The bill is almost the same as the identically named bill both legislators introduced in the last Congress and which expired without committee action in either chamber—although in the final days of 2010, the bill’s purported $7 billion in savings to the Treasury had been proposed as a “pay-for” to cover the extended medical needs of first-responders to the 9/11 attacks.
The only difference between the new bill and the old one is a minor provision clarifying criteria for establishing independence of securities brokers-dealers in the financial services industry. Otherwise, it does what the 2010 bill did: repeals the safe harbor, empowers the Internal Revenue Service to issue advisories on worker classification, provides for a transitional period of a few months for any relationship formerly protected by Section 530 (but now judged to be an employment relationship) to come into employment tax compliance, and other provisions, including a requirement for the IRS to provide annual reports on its enforcement activities.
If, as in the past, the Congressional Budget Office scores this bill as generating revenue for the government, it could again become a factor in House and Senate negotiations over revenue reconciliation. We are gratified that FRA members took pains to explain the actual impacts of Section 530 repeal to members of both chambers during last year’s Fly-In. FRA staff will be meeting with representatives of other affected industries in late March to assess current congressional sentiment and whether further action is advisable at this point.
Neil Ward is the Vice-President of Public Affairs for the Forest Resources Association that represents diverse segments of the wood fiber supply chain, promoting forest products industry members' ability to compete successfully in the global marketplace.