By Dominick Simone, SVP-Client Services, SCI, LLC.
The way Americans work has changed dramatically, but many of the federal tax rules governing independent businesses have not. Today, millions of professionals—from consultants and tradespeople to technology specialists, healthcare providers, and delivery contractors—operate successful independent businesses serving multiple clients. Yet they continue to navigate tax rules built for a much different workforce.
One of the biggest challenges under the current system is uncertainty. Worker classification for federal tax purposes often relies on subjective, case-by-case evaluations, making it difficult for businesses and independent contractors to know whether their working relationships will be viewed correctly. Even when businesses act in good faith, they can face audits, penalties, or retroactive tax assessments years later.
That’s why the Freelancer Expense and Tax Relief (FLEX) Act was introduced, and why trade associations for the Final-mile supply chain, like the Customized Logistics and Delivery Association (CLDA) supports its advancement. The independent business economy deserves greater clarity through objective standards that recognize legitimate independent business relationships. Unlike the current system, which relies on subjective interpretations, the FLEX Act establishes clear criteria, including written service agreements, the use of an Employer Identification Number (EIN), the ability to work with multiple clients, control over how services are performed, financial responsibility, and providing the primary tools or equipment needed to perform the work.
By establishing these standards, the FLEX Act would give businesses and independent contractors greater confidence before entering into a working relationship, rather than leaving them to defend their decisions years later during an audit.
The proposal also includes a temporary federal income tax credit for qualifying independent contractors equal to 20% of their self-employment taxes through 2036. Importantly, this credit would not reduce Social Security or Medicare contributions, allowing independent business owners to receive targeted tax relief while preserving the benefits tied to those programs.
Just as importantly, the FLEX Act does not rewrite existing labor laws or change wage-and-hour protections, workers’ compensation requirements, or collective bargaining rights. Its focus is specifically on modernizing federal employment tax administration while maintaining enforcement against fraud and intentional misclassification.
As the independent workforce continues to grow, many believe the tax system should evolve alongside it. The FLEX Act represents an effort to provide clearer rules, reduce unnecessary disputes, and create a more predictable framework for businesses and independent professionals operating in today’s economy.
Help Move the Conversation Forward
The FLEX Act provides a practical path toward modernizing federal tax rules for legitimate independent business relationships. Greater clarity and consistency can help reduce unnecessary uncertainty while supporting the businesses and independent contractors that power the logistics and final-mile delivery industry.
If you believe the federal tax code should better reflect today’s independent workforce, now is the time to make your voice heard.
Consider reaching out to your U.S. Senators and Representative to encourage them to learn more about the FLEX Act and the role it could play in providing clearer tax rules for legitimate independent business relationships. Whether you’re an independent contractor, business owner, carrier, broker, or industry stakeholder, your perspective can help policymakers better understand the real-world impact of outdated tax regulations.
Meaningful change begins with informed conversations. By engaging with your elected officials and encouraging support for the FLEX Act, you can help advance efforts to modernize the tax framework for today’s independent workforce and strengthen the future of the transportation and logistics industry.
