[comp.edu] Tax law section 1706 to be repealed?

mcb@styx.UUCP (Michael C. Berch) (01/07/87)

My consulting broker called me this afternoon with the news that 
he has heard a "reliable rumor" from an associate that Sen. Moynihan
will introduce a "technical corrections" bill in the Senate this week 
to repeal Section 1706 of the new tax law -- the anti-subcontractor
provision.

I have been unable to verify this (my online search of the Dow
Jones Information Service turned up nothing) but more should be known
in the next few days. I'll try Moynihan's office tomorrow morning; his
staff should be able to check it out.

Michael C. Berch
ARPA: mcb@lll-tis-b.arpa
UUCP: ...!lll-lcc!styx!mcb   ...!lll-crg!styx!mcb  ...!ihnp4!styx!mcb

elliot@well.UUCP (Elliot Fabric) (01/08/87)

According to the CCH Standard Fed)Kral Tax Reports - Taxes On Parade, No. 57, 
Page 4, December 30, 1986 --

    Independent Contractor Status Under '86 TRA to Be Clarified

An IRS spokesman confirmed December 23, 1986 that the Service will issue 
a news release "by the end of the year" aimed at clarifying a provision 
of the 1986 Tax Reform Act concerning the independent contractor status 
of technical specialists.  The provision has met with controversy and a 
variety of possible interpretations.

Pursuant to Act Sec. 1706, as of January 1, 1987, technical specialists 
such as engineers, designers, drafters, computer programmers, systems 
analysts or "other similarly skilled workers(s) engaged in a similar line 
of work," who contract through a third party for their services will no 
longer be protected from classification as employees under the provisions 
of Sec. 530 of the Revenue Act of 1978.  Individuals reclassifieds as 
employees would become subject to withholding taxes, and their 
broker/employers would be liable for payroll taxes.

In response to concerns expressed to Sen. Daniel Patrick Moynihan, the 
author of the provision that effectively lifts a 1978 moratorium 
prohibiting IRS issuance of regulations to remove the independent 
contractor status of taxpayers who had a reasonable basis for claiming 
that status, a task force has been convened to develop guidelines on 
the issue.  The key question is whether the provision covers all 
technical personnel, only those engaged in third-party arrangements, 
or some more restricted group of taxpayers.

note: Has anyone seen the IRS release referred to in Paragraph 1?

mnc@m10ux.UUCP (01/08/87)

I just reached Sen. Moynihan's office.  The staff member I spoke to said
she could not comment on the rumor at this time (that he will introduce a
bill to repeal the infamous anti-independent-consultant provision of the
new tax law).  Sounds to me like a strong possibility, otherwise I expect
they would have just said no.
-- 
Michael Condict		{ihnp4|vax135}!m10ux!mnc
AT&T Bell Labs		(201)582-5911    MH 3B-416
Murray Hill, NJ