text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Taxpayer Responsibility, 
  Accountability, and Consistency Act of 2008''.
  
  SEC. 2. INFORMATION REPORTING FOR PAYMENTS TO CORPORATIONS.
  
      (a) In General.--Section 6041 of the Internal Revenue Code of 1986 
  (relating to information at source) is amended by adding at the end the 
  following new subsection:
      ``(h) Payments to Corporations.--
              ``(1) In general.--Notwithstanding any regulations 
          prescribed by the Secretary before the date of the enactment of 
          this subsection, subsection (a) shall apply to payments made to 
          a corporation.
              ``(2) Exception.--Paragraph (1) shall not apply to payments 
          made to a hospital or extended care facility described in 
          section 501(c)(3) which is exempt from taxation under section 
          501(a) or to a hospital or extended care facility owned and 
          operated by the United States, a State, the District of 
          Columbia, a possession of the United States, or a political 
          subdivision, agency or instrumentality of any of the 
          foregoing.''.
      (b) Effective Date.--The amendment made by this section shall apply 
  to payments made more than 1 year after the date of the enactment of 
  this Act.
  
  SEC. 3. DETERMINATION OF ELIGIBILITY FOR SAFE HARBOR TREATMENT OF 
                INDIVIDUALS AS NON-EMPLOYEES FOR PURPOSES OF EMPLOYMENT 
                TAXES.
  
      (a) In General.--Chapter 25 of the Internal Revenue Code of 1986 
  (relating to general provisions relating to employment taxes) is 
  amended by adding at the end the following new section:
  
  ``SEC. 3511. SAFE HARBOR.
  
      ``(a) Termination of Certain Employment Tax Liability.--
              ``(1) In general.--If--
                      ``(A) for purposes of employment taxes, the 
                  taxpayer did not treat an individual as an employee for 
                  any period, and
                      ``(B) in the case of periods after December 31, 
                  1978, all Federal tax returns (including information 
                  returns) required to be filed by the taxpayer with 
                  respect to such individual for such period are filed on 
                  a basis consistent with the taxpayer's treatment of 
                  such individual as not being an employee,
          then, for purposes of applying such taxes for such period with 
          respect to the taxpayer, the individual shall be deemed not to 
          be an employee unless the taxpayer had no reasonable basis for 
          not treating such individual as an employee. This paragraph 
          shall not apply with respect to an individual for any periods 
          beginning after the date of notice of a determination that such 
          individual should be treated as an employee of the taxpayer.
              ``(2) Statutory standards for satisfying the requirements 
          of paragraph (1).--For purposes of paragraph (1), a taxpayer 
          shall be treated as having a reasonable basis for not treating 
          an individual as an employee only if--
                      ``(A) the taxpayer's treatment of such individual 
                  was in reasonable reliance on--
                              ``(i) a written determination (as defined 
                          in section 6110(b)(1)) issued to the taxpayer 
                          addressing the employment status of such 
                          individual or another individual holding a 
                          substantially similar position with the 
                          taxpayer, or
                              ``(ii) a concluded examination (for 
                          employment tax purposes) of whether such 
                          individual (or another individual holding a 
                          substantially similar position) should be 
                          treated as an employee of the taxpayer, with 
                          respect to which there was no determination 
                          that such individual (or another individual 
                          holding a substantially similar position) 
                          should be treated as an employee, and
                      ``(B) the taxpayer (or a predecessor) has not 
                  treated any other individual holding a substantially 
                  similar position as an employee for purposes of 
                  employment taxes for any period beginning after 
                  December 31, 1977.
      ``(b) Definitions.--For purposes of this section--
              ``(1) Employment tax.--The term `employment tax' means any 
          tax imposed by this subtitle.
              ``(2) Employment status.--The term `employment status' 
          means the status of an individual, under the usual common law 
          rules applicable in determining the employer-employee 
          relationship, as an employee or as an independent contractor 
          (or other individual who is not an employee).
      ``(c) Special Rules for Application of Section.--
              ``(1) Notice of availability of section.--An officer or 
          employee of the Internal Revenue Service shall, before or at 
          the commencement of any examination relating to the employment 
          status of one or more individuals who perform services for the 
          taxpayer, provide the taxpayer with a written notice of the 
          provisions of this section.
              ``(2) Rules relating to statutory standards.--For purposes 
          of subsection (a)(2), with respect to any period beginning 
          after the date of the enactment of this paragraph, a taxpayer 
          may not rely on an examination commenced, or a written 
          determination issued, more than 7 years before the beginning of 
          such period.
              ``(3) Substantially similar position.--For purposes of this 
          section, the determination as to whether an individual holds a 
          position substantially similar to a position held by another 
          individual shall be made by the Secretary in a manner 
          consistent with the Fair Labor Standards Act of 1938.
      ``(d) Burden of Proof.--A taxpayer must establish entitlement to 
  relief under this section by a preponderance of the evidence.
      ``(e) Petitions for Review of Status.--
              ``(1) In general.--Under procedures established by the 
          Secretary not later than 1 year after the date of the enactment 
          of this section, any individual who performs services for a 
          taxpayer may petition (either personally or through a 
          designated representative or attorney) for a determination of 
          the individual's status for employment tax purposes.
              ``(2) Administrative procedures.--The procedures 
          established under paragraph (1) shall provide for--
                      ``(A) a determination of status not later than 90 
                  days after the filing of the petition with respect to 
                  employment in any industry (such as the construction 
                  industry) in which employment is transient, casual, or 
                  seasonal, and
                      ``(B) an administrative appeal of any determination 
                  that an individual is not an employee of the taxpayer.
              ``(3) Prohibition against retaliation.--
                      ``(A) In general.--No taxpayer may discharge an 
                  individual, refuse to contract with an individual, or 
                  otherwise discriminate against an individual with 
                  respect to compensation, terms, conditions, or 
                  privileges of the services provided by the individual 
                  because the individual (or any designated 
                  representative or attorney on behalf of such 
                  individual) filed a petition under paragraph (1).
                      ``(B) Rights retained by individual.--Nothing in 
                  this paragraph shall be deemed to diminish the rights, 
                  privileges, or remedies of any individual under any 
                  Federal or State law, or under any collective 
                  bargaining agreement.
      ``(f) Results of Misclassification Determinations.--In any case in 
  which the Secretary determines that a taxpayer has misclassified an 
  individual as not an employee for employment tax purposes, the 
  Secretary shall inform the Secretary of Labor about such 
  misclassification and notify the individual of any eligibility for the 
  refund of self-employment taxes under chapter 2.
      ``(g) Regulations.--The Secretary shall, not later than 1 year 
  after the date of the enactment of this section, prescribe such 
  regulations as may be necessary and appropriate to carry out the 
  purposes of this section.''.
      (b) Conforming Amendments.--
              (1) Paragraph (2) of section 7436(a) of such Code is 
          amendment by striking ``section 530 of the Revenue Act of 
          1978'' and inserting ``section 3511''.
              (2) The table of sections for chapter 25 of such Code is 
          amended by adding at the end the following new item:
  
  ``Sec. 3511. Safe harbor.''.
      (c) Termination of Section 530 of the Revenue Act of 1978.--Section 
  530 of the Revenue Act of 1978 shall not apply to services rendered 
  more than 1 year after the date of the enactment of this Act.
      (d) Effective Date.--The amendments made by this section shall 
  apply to services rendered more than 1 year after the date of the 
  enactment of this Act.
  
  SEC. 4. ANNUAL REPORTS ON WORKER MISCLASSIFICATION.
  
      The Secretary of the Treasury shall issue an annual report on 
  worker misclassification. Such report shall include the following:
              (1) Information on the number and type of enforcement 
          actions against, and examinations of, employers who have 
          misclassified workers.
              (2) Relief obtained as a result of such actions against, 
          and examinations of, employers who have misclassified workers.
              (3) An overall estimate of the number of employers 
          misclassifying workers, the number of workers affected, and the 
          industries involved.
              (4) The impact of such misclassification on the Federal tax 
          system.
              (5) Information on the outcomes of the petitions filed 
          under section 3511(e) of the Internal Revenue Code of 1986.
  
  SEC. 5. INCREASE IN INFORMATION RETURN PENALTIES.
  
      (a) Failure To File Correct Information Returns.--
              (1) In general.--Section 6721(a)(1) of the Internal Revenue 
          Code of 1986 is amended--
                      (A) by striking ``$50'' and inserting ``$250'', and
                      (B) by striking ``$250,000'' and inserting 
                  ``$3,000,000''.
              (2) Reduction where correction in specified period.--
                      (A) Correction within 30 days.--Section 6721(b)(1) 
                  of such Code is amended--
                              (i) by striking ``$15'' and inserting 
                          ``$50'',
                              (ii) by striking ``$50'' and inserting 
                          ``$250'', and
                              (iii) by striking ``$75,000'' and inserting 
                          ``$500,000''.
                      (B) Failures corrected on or before august 1.--
                  Section 6721(b)(2) of such Code is amended--
                              (i) by striking ``$30'' and inserting 
                          ``$100'',
                              (ii) by striking ``$50'' and inserting 
                          ``$250'', and
                              (iii) by striking ``$150,000'' and 
                          inserting ``$1,500,000''.
              (3) Lower limitation for persons with gross receipts of not 
          more than $5,000,000.--Section 6721(d)(1) of such Code is 
          amended--
                      (A) in subparagraph (A)--
                              (i) by striking ``$100,000'' and inserting 
                          ``$1,000,000'', and
                              (ii) by striking ``$250,000'' and inserting 
                          ``$3,000,000'',
                      (B) in subparagraph (B)--
                              (i) by striking ``$25,000'' and inserting 
                          ``$175,000'', and
                              (ii) by striking ``$75,000'' and inserting 
                          ``$500,000'', and
                      (C) in subparagraph (C)--
                              (i) by striking ``$50,000'' and inserting 
                          ``$500,000'', and
                              (ii) by striking ``$150,000'' and inserting 
                          ``$1,500,000''.
              (4) Penalty in case of intentional disregard.--Section 
          6721(e) of such Code is amended--
                      (A) by striking ``$100'' in paragraph (2) and 
                  inserting ``$500'',
                      (B) by striking ``$250,000'' in paragraph (3)(A) 
                  and inserting ``$3,000,000''.
      (b) Failure To Furnish Correct Payee Statements.--
              (1) In general.--Section 6722(a) of such Code is amended--
                      (A) by striking ``$50'' and inserting ``$250'', and
                      (B) by striking ``$100,000'' and inserting 
                  ``$1,000,000''.
              (2) Penalty in case of intentional disregard.--Section 
          6722(c) of such Code is amended--
                      (A) by striking ``$100'' in paragraph (1) and 
                  inserting ``$500'', and
                      (B) by striking ``$100,000'' in paragraph (2)(A) 
                  and inserting ``$1,000,000''.
      (c) Failure To Comply With Other Information Reporting 
  Requirements.--Section 6723 of such Code is amended--
              (1) by striking ``$50'' and inserting ``$250'', and
              (2) by striking ``$100,000'' and inserting ``$1,000,000''.
      (d) Effective Date.--The amendments made by this section shall 
  apply with respect to information returns required to be filed after 
  December 31, 2008.
target: Taxpayer Responsibility, Accountability and Consistency Act of 2008 - Amends the Internal Revenue Code to: (1) require reporting to the Internal Revenue Service (IRS) of payments of $600 or more made to corporations; (2) set forth criteria and rules relating to the treatment of workers as employees or independent contractors; and (3) increase penalties for failure to file correct tax return information or comply with other information reporting requirements.
  
  Requires the Secretary of the Treasury to issue an annual report on worker misclassification.
feat_title: To amend the Internal Revenue Code of 1986 to modify the rules relating to the treatment of individuals as independent contractors or employees, and for other purposes.