Independent Contractor Compliance Blog

WASHINGTON-The nation woke up this week to a new political landscape. The Democrats will now have the power to make the changes they want. It could be the perfect tax and enforcement storms coming together.

The Los Angeles Times reported November 5, 2008, “The victory unleashes pent-up demand for a host of Democratic causes, including expanding labor union rights, providing universal healthcare and raising taxes on the wealthy.”

The international edition of the New York Times, Herald Tribune, reports November 5, 2008, “(democrats) gained 19 seats…(giving) Nancy Pelosi, more maneuvering room as she seeks to forge ahead with the agenda of President-elect Barack Obama.”

What are some of those “pent-up causes” and “agendas”?

One of them is a bill that Senator Obama himself sponsored.  It is patiently awaiting action.  U.S. Senate Bill 2044, Sponsored by Senators Obama, Durbin, Kennedy, and Murray, is designed to “provide procedures for the proper classification of employees and Independent Contractors.”

S – 2044 is the U.S. Senate version of a U.S. House of Representatives bill-HR 6111.  Specifically, both of these bills will significantly reduce protection under IRS Safe Harbor Provisions (Internal Revenue Code Section 530) and give the IRS more powerful tools to require businesses to properly classify consultants and contingent workers as employees.  They also put pressure on states to be stronger in enforcing IC compliance laws, or risk losing federal funding. These bills are meant to close loop holes that have been identified by members of Congress, labor organizations and tax bureaucrats for several years.

For more details on these bills go to “IC Legislation” in this blog and search for “Increasing Scrutiny of Independent Contractors.”

President-elect Obama will soon have the opportunity to make the bill, he sponsored as a senator, into a law.

Now is the time to protect your company.

I recommend you get ahead of the curve.  Don’t wait until the IRS knocks on your door.  A few dollars invested in risk mitigation today could save your company many times the investment later.