Geothermal Energy Investment Act of 2010

Mr. President, today I am introducing the Fair Playing Field Act of 2010 to provide a fairer playing field to America's businesses and workers. It will ensure workers are afforded protections already in the law, such as workers' compensation, Social Security, Medicare, payment of overtime, unemployment compensation, and the minimum wage. It will also ensure help

employers who play by the rules are not forced to compete against those businesses that don't. This legislation is identical to legislation being introduced in the House of Representatives by Representative McDermott. Senators Murray, Gillibrand, Sherrod Brown, Franken, Akaka, Schumer, and Leahy are cosponsors.

Under current law, employers are required to take certain actions on behalf of their employees including withholding income taxes, paying Social Security and Medicare taxes, paying for unemployment insurance, and providing a safe and nondiscriminatory workplace. Employers are not required to undertake these obligations for independent contractors. Too often, workers are misclassified by businesses looking to avoid paying taxes. These businesses receive an unfair advantage over businesses that play by the rules.

The Internal Revenue Service, IRS, currently uses a common law test to determine whether a worker is an employee or independent contractor. Unfortunately, a loophole exists which allows a business to escape liability for misclassifying employees as independent contractors. Furthermore, there is statutory prohibition on the IRS providing guidance through regulation on employee classification.

Federal and State revenue is lost when businesses misclassify their workers as independent contractors. A study estimated that, between 1996 and 2004, $34.7 billion of Federal tax revenues went uncollected due to the misclassification of workers and the tax loopholes that allow it. Recently, GAO and Treasury Inspector General reports have cited misclassification as posing significant concerns for workers, their employers, and government revenue.

Section 530 of the Revenue Act of 1978 generally allows taxpayers to treat a worker as not being an employee for employment tax purposes, regardless of the worker's actual status under the common law test, unless the taxpayer has no reasonable basis for such treatment or fails to meet certain requirements. Section 530 is commonly referred to as a ``safe harbor.'' This provision was initially enacted in 1978 for a year to give Congress time to resolve these complex issues. In 1982, the safe harbor was made permanent. In addition, section 530 prevents the IRS from requiring an employer afforded a safe harbor to reclassify a worker prospectively.

The Fair Playing Field Act of 2010 ends the moratorium on IRS guidance addressing the worker classification issue. The legislation requires the Secretary of Treasury to issue prospective guidance clarifying the employment status of individuals for Federal employment tax purposes. The effective date for the provision of authority to issue guidance is the date of enactment.

Under the Fair Playing Field Act of 2010, the section 530 safe harbor will continue to be available to employers with respect to the treatment of an individual for Federal employment tax purposes until the individual has a reclassification date. An individual's ``reclassification date'' is the earlier of the following two dates: the first day of the first calendar quarter beginning more than 180 days after the date of an ``employee classification determination'' with respect to such individual; or the effective date of the ``first application final regulation'' issued by the Secretary of the Treasury with respect to such individual. An ``employee classification determination'' with respect to an individual is a determination by the Secretary of the Treasury, in connection with an audit of the taxpayer that begins after the date that is one year after the date of enactment, that a class of individuals holding positions with the taxpayer that are substantially similar to the position held by the individual are employees.

I urge my colleagues to cosponsor the Fair Playing Field Act of 2010 which will provide valuable protections to workers who are erroneously misclassified and help combat the underground economy.

Mr. President, today I have introduced two separate bills, S. 3790 and S. 3791, intended to hold members of Congress and other Federal employees to the same tax rules Washington imposes on the rest of America.

In 2009, the Internal Revenue Service, IRS, found nearly 100,000 civilian Federal employees were delinquent on their Federal income taxes, owing over $1 billion in unpaid Federal income taxes. When considering retirees and military, more than 282,000 Federal employees owed $3.3 billion in taxes.

These bills are not intended to single out the majority of Federal employees who work hard and pay their taxes, but members of Congress and Federal employees have a clear obligation to pay their Federal income taxes. Legislators and government employees should not be exempt from the laws they write and enforce. The very nature of Federal employment and the concept inherent to ``public service'' demands those being paid by taxpayers contribute their fair share of taxes. They should lead by example.

Tax delinquency rate among congressional employees exceeds the rate of all returns filed nationwide. Taxpayers are fed up with those in Washington living under a different set of rules than the

rest of America. At a time when Congress may allow taxes to increase on some or even all Americans, Congress should not expect other Americans to pay more taxes when they are not even paying the taxes they owe under the rates they set themselves.

The bills I am introducing are fair to Federal employees and other taxpayers. Both bills carefully reach only those paid by the taxpayers who have willfully neglected to pay their incomes taxes.

The legislation excludes elected officials or Federal employees who made oversights in their personal taxes but willfully agree to pay them, or if they are challenging the delinquency in court or through the IRS. Instead, it targets those who willfully neglect or avoid the pay their taxes.

Specifically, it excludes Federal employees from termination and Members of Congress from repercussions if the individual is currently paying the taxes, interest, and penalties owed to IRS under an installment plan; the individual and the IRS have worked out a compromise on the amount of taxes, interest and penalties owed and the compromise amount agreed upon is being repaid to IRS; the individual has not exhausted his or her right to due process under the law; or the individual filed a joint return and successfully contends he or she should not be fully liable for the taxes, interest, and/or penalties owed because of something the other party to the return did or did not do.

The first bill requires all Federal employees to be current on their Federal income taxes or be fired from their jobs.

The second bill requires Members of Congress to report any outstanding tax liability. If the Member possesses a tax liability, this bill would require the appropriate congressional committee to launch an ethics investigation and the Member's salary would be reduced in accordance with the amount he or she owes.

These bills require no more of members of Congress or Federal employees than is required of other Americans.

It should be a priority of this Congress to pass these solutions as a way to guarantee equal treatment under the law. This is especially important at this time when our national debt exceeds $13.5 trillion since this legislation is estimated to reduce the Federal deficit by at least $3 billion.

I hope my colleagues on both sides of the aisle will support these bills to demonstrate their commitment to requiring Congress to live under the same rules it imposes on the rest of the country. It is time for every member of Congress to pay their taxes rather than simply spending the taxes of others.

Mr. President, I am pleased to join with my colleague from Idaho, Senator Mike Crapo, in introducing the Geothermal Energy Investment Act of 2010. This legislation will amend an already existing investment tax credit for geothermal energy authorized under Sec. 48 of the tax code. The bill would provide geothermal energy with the same 30 percent investment tax credit that is now available to solar energy and fuel cell technologies in Sec. 48 and extend this 30 percent tax credit for geothermal through December 31, 2016, as it is for these other technologies. Without this legislation, new geothermal energy projects would be allowed only a 10 percent investment tax credit under Section 48. This legislation will create a more level playing field among clean, renewable energy technologies and support substantial growth in utility scale geothermal power, distributed on-site power generation, and heating for buildings and commercial processes.

Geothermal energy facilities provide a continuous supply of renewable energy with very few environmental impacts. Although the United States has more geothermal capacity than any other country, this potential has been barely tapped. This shortfall is partly due to the high initial cost and risk involved in locating and developing geothermal resources. Extending the 30 percent tax credit through 2016 will help give geothermal developers the assurance they need to make the long lead- time investments in exploration and development necessary to make expansion of geothermal energy a reality.

This legislation is identical to a bipartisan companion bill, H.R. 5612, that Representative Earl Blumenauer from Oregon has introduced in the House.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.