This testimony focuses on the tax compliance issues arising from health
care reform proposals. Some reform provisions affect the rules for
classifying workers as employees or independent contractors and for
reporting payments made to independent contractors on information
returns. Also, some employers would be required to pay most health
insurance premiums for their workers. GAO makes three main points.
First, independent contractors tend to have lower tax compliance than
employees. Second, an employer mandate could induce employers to use
more independent contractors, some of which will be misclassified
because of unclear classification rules. Third, to the extent that
health care reform can address these issues through better information
reporting and other measures, the better for tax administration.