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Sen. Bond Says Worker-Status Issue Impairs Home-Based Businesses

Tuesday, April 23, 1996

OnLine

Senate Small Business Committee Chairman Christopher Bond, R-Mo, said home-based businesses, like other small businesses, face great difficulty in classifying their workers as independent contractors or employees.

The existing 20-factor test "is a nightmare of subjectivity and unpredictability. Inevitably, what happens is that IRS agents are capitalizing on the lack of clarity" and too many bona fide independent contractor relationships with businesses suffer, Bond said at a Senate Small Business Committee hearing.

To address the problem, Bond and Sen. Don Nickles, R-Okla, have introduced a bill, S.1610, that would establish a three-part test for making the determination. Currently, 17 Senators have co-sponsored the legislation.

Bond also said the current level of health insurance deduction for the self-employed and availability of the home-office deduction also might be causing problems for home-based businesses. "As the number of home-based businesses increases, the importance of the [home office] deduction mounts," he said.

Also at the hearing, a representative from the National Federation of Independent Business urged Congress to treat health insurance costs of the self-employed in the same manner as those working for traditional employers. Specifically, the NFIB representative expressed support for provisions in the pending health reform bill in the House and Senate that would increase deductibility to 80 percent.