Sen. John Thune's (R-SD) bill easing regulations for independent contractors and freelance workers may be added to the tax reform proposal that is being debated in the House due to the sponsorship of Congressman Tom Rice (R-SC).
According to Thune’s website, the New GIG Act would “create a safe harbor based on objective tests, which if satisfied, would ensure that the service provider (worker) would be treated as an independent contractor, not an employee, and the service recipient (customer) would not be treated as the employer. In the context of the gig economy where an internet platform or app facilitates the transactions and payments, that third party would also not be treated as the employer.”
The bill aims to create objective tests to help independent contractors and freelancers. It also establishes new IRS reporting rules and creates "retroactive reclassification" to ease the confusion surrounding these jobs.
“Today’s fast-growing ‘gig economy’ has made it easier for people to offer unique services, like home repair and cleaning, child care, food delivery, or ride sharing, through easy-to-use mobile applications that can be opened with a simple swipe of a finger,” Thune said in a statement. “While these gig economy companies have created thousands of new jobs, they’ve also faced new challenges when it comes to how the service providers are classified by the IRS.”
He added, “My legislation would provide clear rules so these freelance-style workers can work as independent contractors with the peace of mind that their tax status will be respected by the IRS.”
The New GIG Act has been met with support from several conservatives who have praised its efforts to ease the burden on the American worker.
Matt Feeney of the Cato Institute said, "The new and growing gig economy is an exciting new feature of modern life, but it has unfortunately run up against numerous challenges posed by outdated tax law. Tax reforms that account for the gig economy would allow for workers to engage in mircro-entrepreneurship without worrying about running afoul of the IRS."
Jenny Beth Martin of the Tea Party Patriots added, “The reform proposed by Senator Thune and Congressman Rice would simplify the tax code for Gig Economy companies and their independent contractors, and therefore incentivize more people to participate and succeed in these new jobs. There’s no cost to taxpayers and it’s true reform.”
The New GIG Act was initially proposed to the Senate in July.