Rice proposes bill to simplify worker classifications in U.S. tax code

Rep. Tom Rice

U.S. Rep. Tom Rice (R-SC) on March 7 reintroduced proposed legislation to clarify the federal classification of American workers as independent contractors or employees under the nation’s tax code.

The New Economy Works to Guarantee Independence and Growth (NEW GIG) Act, H.R. 1625, would amend the Internal Revenue Code of 1986 to provide a safe harbor for determinations of worker classification and to require increased reporting, according to the congressional record.

“These GIG economy companies and the people they employ have contributed to dynamic economic growth across the country, but face challenges regarding their worker classification with the IRS,” Rep. Rice said on March 8. “The NEW GIG Act will clarify how these workers are treated under the tax code, providing certainty for the millions of people engaged in the on-demand community.”

U.S. Sen. John Thune (R-SD) on March 7 introduced the same-named companion bill, S. 700, in the U.S. Senate.

If enacted, the measure also would establish a safe harbor to permit workers to comply with an easier set of objective factors that would classify them as an independent contractor, according to a summary of the bill provided by Rep. Rice’s office. 

The bill also would update tax reporting requirements for independent contractors, according to the summary, by requiring reporting of payments totaling $1,000 or more in a year, up from $600 under current law. 

“Today’s technology-driven economy has created new opportunities for people who provide on-demand services like ride sharing, home cleaning or food delivery,” explained Rep. Rice. “Just last month, WAITR, a platform for online ordering and food delivery, created 75 new jobs in the Pee Dee,” a region of the lawmaker’s home state of South Carolina located in the northeast corner of the state. 

Rep. Rice during the 115th Congress originally introduced the U.S. House of Representatives version of the NEW GIG Act of 2017, H.R. 4165, which stalled in committee review, as did Thune’s Senate version, S. 1549.

The reintroduced House version, H.R. 1625, has been referred for consideration to the U.S. House Ways and Means Committee, while S. 700 is under review by the U.S. Senate Finance Committee.

“I would like to thank Senator John Thune for his partnership on this legislation that will provide much needed certainty for GIG economy independent contractors and stimulate investment in this sector of the economy,” said Rep. Rice last week.