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From: tenney@well.UUCP (Glenn S. Tenney)
Newsgroups: misc.legal,comp.edu
Subject: Re: Sorry - Independent contractors and the law
Message-ID: <2307@well.UUCP>
Date: Sun, 4-Jan-87 15:53:21 EST
Article-I.D.: well.2307
Posted: Sun Jan  4 15:53:21 1987
Date-Received: Mon, 5-Jan-87 01:38:57 EST
References: <2352@mtuxo.UUCP> <488@unc.unc.UUCP> <795@maynard.BSW.COM>
Reply-To: tenney@well.UUCP (Glenn S. Tenney)
Organization: Whole Earth Lectronic Link, Sausalito CA
Lines: 39
Keywords: taxes Moynihan contractors sleaze
Xref: mnetor misc.legal:521 comp.edu:30

In article <795@maynard.BSW.COM> campbell@maynard.UUCP (Larry Campbell) writes:
>In article <488@unc.unc.UUCP> rentsch@unc.UUCP (Tim Rentsch) writes:
>
>>A couple of quick thoughts on the recent tax legislation requiring
>>engineering and programming consultants to be considered "employees"
>>for tax purposes:
>> ...
>
>THIS IS NOT TRUE.  It is true ONLY for consultants who get work through
>temporary help agencies (body shops) and the like, and requires that they
>be considered employees of the temp agency.  Totally free-lance consultants
>who do not use agencies are NOT AFFECTED.
>
Well, it is not clear to me.  The Senate commentary seems to say that
this is INTENDED to cover individuals retained by technical services
firms, but the actual text doesn't.  The actual text of 1706 (except for the
general where it goes clause and when it takes effect clause) is only ONE
sentence:

  "Exception -- This section shall not apply in the case of an individual
  who, pursuant to an arrangement between the taxpayer and another person,
  provides services for such other person as an engineer, designer, drafter,
  computer programmer, systems analyst, or other similarly skilled worker
  engaged in a similar line of work."

What this says to me is that EVERY consultant is no longer given safe harbor
and CAN now be considered an employee.  It doesn't say they MUST be considered
an employee, but we know how likly that is :-)

The real problem is that the Feds will, I'm sure, send letters out to every
company that submitted 1099's warning them that THEY will be liable for all
those extra $$'s probably 20-30% of what they've already paid the consultant.
If you were a company with that hanging over your head, what would you do?

-- Glenn Tenney 
UUCP: {hplabs,glacier,lll-crg,ihnp4!ptsfa}!well!tenney
ARPA: well!tenney@LLL-CRG.ARPA        Delphi and MCI Mail: TENNEY
As Alphonso Bodoya would say... (tnx boulton)
Disclaimers? DISCLAIMERS!? I don' gotta show you no stinking DISCLAIMERS!