North America's Strongest Union

Teamsters Praise Bill to Close Loophole for Tax Cheats

(Washington) –Teamsters General President Jim Hoffa said the union strongly supports the Taxpayer Responsibility, Accountability and Consistency Act of 2009 filed today by Sen. John Kerry, D-Mass.

The bill would close a loophole that allows employers to avoid paying Social Security and Medicare taxes, withholding income taxes and contributing to workers’ compensation and unemployment insurance.

Companies escape those responsibilities by misclassifying their employees as “independent contractors.”

“Misclassification hurts responsible employers who pay their taxes, provide health insurance and respect their workers’ right to join a union,” Hoffa said. “It lets unscrupulous employers cheat workers out of benefits they’re entitled to.”

“It’s time to level the playing field so companies that play by the rules aren’t at a competitive disadvantage to companies that cut corners by misclassifying their employees,” Hoffa said. “I’d like to thank Sen. Kerry for sponsoring this important legislation.”

As many as 30 percent of all employers misclassify their employees as “independent contractors,” according to the U.S. Department of Labor.  

In Massachusetts, the rate of misclassification rose to 13.4 percent between 2001 and 2003 from 8.4 percent between 1995 and 1997. 

The federal government lost an estimated $34.7 billion in tax revenue between 1996 and 2004.

The bill removes the loophole that allows businesses to bypass the Internal Revenue Service’s test of whether a worker is an employee or an independent contractor. 

It would also require businesses that pay more than $600 to corporate providers of property and services to file information with each providers and the IRS. 

And it would allow employers to treat employees as contractors only if the decision was based on a written determination or tax examination by the IRS. 

Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.


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