On independent contractors - results of readers' poll on independent contractors - Brief Article

Nation's Business, May, 1996

Background: High on the wish list of recommendations by the 1995 White House Conference on Small Business was reform of laws and regulations on independent contractors. Stories in the December 1995 and March 1996 issues of Nation's Business described the problems of classifying workers for tax purposes and offered ideas on how to avoid such difficulties. Several bills pending in Congress would change the rules. These questions ask for your experiences and views on this issue.

Results of this poll will be forwarded to administration officials and congressional leaders. (Individual responses will remain confidential.) Send the attached, postage-paid Reader Response Card. Or circle your answers below and fax this page to (202) 463-5636.

(1) Do you use independent contractors in your business?

1. Yes

2. No

(2) What criteria do you use to classify the persons you hire as independent contractors?

1. "Safe-harbor protection" (a reasonable basis for treating the worker as an independent contractor, submission of all required federal tax returns, and having no employee doing similar work)

2. The 20-part Internal Revenue Service test

3. Both

4. Not applicable

(3) If you use independent contractors, has the Internal Revenue Service ever questioned your classifications?

1. Yes

2 No

3 Not applicable

(4) If the IRS has audited your business, what was the result?

1. No change was made regarding my independent contractors

2. Some or all of my independent contractors were reclassified as employees, but no penalties and/or back taxes were assessed

3. Some or all independent contractors were reclassified, and the IRS assessed back taxes and/or penalties

4. Not applicable

(5) Have you ever forgone using independent contractors to avoid dealing with the IRS?

1. Yes

2. No

(6) How important a consideration is use of independent contractors in deciding whether to expand your business?

1. Very important

2. Somewhat important

3. Unimportant

4. Not considering expansion