Committee Approves Tax Fraud Legislation

The Senate Business and Labor Committee approved legislation Monday to stop tax fraud in the state when employers improperly misclassify workers as “independent contractors” to avoid paying unemployment and other taxes. Senate Bill 1384, by Sen. Andrew Rice, would allow the Oklahoma Tax Commission, Oklahoma Workers’ Compensation Court and Oklahoma Employment Security Commission to share information and coordinate investigative and enforcement efforts in order to find employers who intentionally misclassify individuals as independent contractors rather than employees.

"This is an effort to empower these three key agencies to address this issue that they know exists but simply don’t have the staff to focus on it. By allowing them to share information, though, they could reduce employee misclassification and help bring in millions of dollars of lost tax revenues," said Rice, D-Oklahoma City. "Most Oklahoma businesses properly classify their workers, but we can't turn our heads from those who don't. Being that these agencies can't afford to hire more staff to address this issue, it only makes sense to let them collaborate and help each other find the violators."

Misclassification can leave employees vulnerable by denying them coverage under certain antidiscrimination, leave and labor standards laws as well as denying them access to employer-provided health insurance coverage and pension plans. Misclassification can also affect how federal and state programs, such as payment of taxes and payments into state workers’ compensation and unemployment insurance programs, are administered.

SB 1384 will next be heard by the full Senate.