H.R. 9114: Gig Is Up Act

This bill, titled the Gig Is Up Act, proposes changes to how payroll taxes are handled for independent contractors working with large companies. Here are the key components of the bill:

Who it affects

The bill specifically targets large employers who meet two criteria:

• They must have at least $100 million in gross receipts for a calendar year.
• They must contract with at least 10,000 individuals to provide services as independent contractors.

Payroll Tax Withholding

For these large employers, any payment made to independent contractors for their services will be treated as wages for tax purposes. This means the employers will need to:

• Withhold payroll taxes from payments made to these independent contractors.
• Calculate the withholding using rates that are twice the normal rates applied to employees.

Impact on Payments and Settlements

Additionally, any financial settlements or payments made to independent contractors in the course of their service contracts will also be treated as taxable wages. This ensures that independent contractors are subject to the same payroll tax rules as traditional employees when working for these large companies.

Social Security Considerations

The bill also amends how self-employment earnings are calculated for Social Security purposes. The following changes are proposed:

• Payments treated as wages under this bill will be included in self-employment earnings.
• Self-employed individuals will be required to incorporate half of the payroll tax contributions from these payments when calculating their Social Security earnings.

Effective Date

The regulations established by this bill will go into effect for payments made after December 31, 2026.

Clerical Changes

The bill also includes minor clerical amendments to the Internal Revenue Code to reflect these new provisions.

Relevant Companies

None found.