From: chuck@eng.umd.edu (Chuck Harris - WA3UQV)
Subject: Re: 1706 Repeal Debated
Date: Fri, 14 Aug 92 18:35:14 GMT
Organization: University of Maryland, Department of Electrical Engineering

In article <183060@pyramid.pyramid.com> jmuth@pyrps5.eng.pyramid.com (John Muth) writes:
>In article <1992Aug13.085419.8297@weyrich.UUCP> tnet.com!weyrich!orville writes:
>>In article <183010@pyramid.pyramid.com> jmuth@pyrps5.eng.pyramid.com (John Muth) writes:
>>>
>>>If you are willing to hire yourself out on a per-job (ie. fixed bid) basis,
>>>1706 is irrelevent. If you market yourself and find your own clients
>>>1706 is not very relevent. 1706 only screws you if you work by the
>>>hour through a broker.
>>>
>>
>>Tell that to the clients -- they aren't taking any chances. Fear of the
>>IRS is much more powerful in this country than fear of the devil; the
>>company lawyers would rather be "safe" than try to argue with the IRS
>>when the all the cards in the deck are stacked in favor of the IRS.
>>
>>Screwed is screwed. Period.
>>
>>orville
>
>Damn right I'll tell that to the client. I'll tell that to the client's
>lawyers too. I know 1706 and I know the steps I take to ensure my company
>complies with the IRS "20 questions". Just another objection to be met
>as part of the sales pitch, right along with rate and payment terms. No big 
>deal.

It's good to try and educate your potential clients.  They won't listen to you,
but it is good to try.

If your potential client has the choice between a person from a shop and an
independent, and knows that the person from the shop will come with out legal
difficulties, and that hiring the independent will require consultation with
a lawyer; who do you think they will hire?  I mean REALLY?

>
>Most job shops aren't much bigger than than independents. How did
>they pass the muster? ...

They didn't have to, they got Sen. Moynahan to sponsor 1706, and then they
set up their shops to work within the wording of the law. (eg. all TSS's are
employed by the shop.)  The 1706 way is much more profitable for the shops.

>... Call themselves a company instead of an independent?
>Nothing stopping you from doing that. Jump through a few hoops to get on
>an approved vendor list? How hard can that be? Worst case they'll want
>you incorporated. Maybe they will want to see proof of insurance. So what?

Section 1706's comment section states that a corporate shell will not protect
an individual from the requirements of 1706.  That recks all 1 person corps
who try to work thru shops as independents.

There is a big difference between the what the shops do, and what you want to
do.  The people in the shops are salesmen and nothing more.  They know how to
handle people, how to hook them, and how to reel them in.  You are a techie
you know how to write the fastest device driver in town, but you can't tolerate
spending the entire day, for weeks at a time, on the phone hunting for clients.
You have a lot of trouble finding the time to look for the next job while you
are engrossed in the details of the current one.  You don't even know for sure
when your current job is going to end.

The section 1706 amendment has nothing to do with the usual two party
relationship between an independent and his client.  Nothing.  But that
isn't what the problem is.  Many TSS's haven't a clue how to get their
next client.  They are technically oriented, not people oriented.  They kinda
accidentally got the last client, and would like to have someone who is more
people oriented help them look for the next.  This makes for the 3 party
relationship that is covered by 1706.

>
>The point is, gov't is always putting up barriers to business. What separates
>the professional from the amateur is his(her) reaction to the barrier. In the
>case of 1706, the client's lawyers will want to make sure your company
>meets certain requirements. Find out what the requirements are and meet
>them. Whining about how unfair it is doesn't get you anywhere. 

Your potential client's lawyers will advise THEIR client to look elsewhere.
These lawyers know that the waters are very muddy.  They know that
fighting the IRS over a technicality, even when you are right, is a money
losing proposition.  The lawyers know that their client will never be bothered
by the IRS if they hire from a shop; but might be if they hire the wrong
independent.

Section 1706 must go away!

Chuck Harris - WA3UQV           | "Remember I am not really a tax expert, I
C.F. Harris - Consulting        |  just play one on the net..."
chuck@eng.umd.edu               |                      - Chuck

Newsgroups: misc.jobs.contract,misc.jobs.offered,misc.jobs.offered.entry