John Kerry: “I join Senator Mack in supporting his legislation to repeal Section 1706 of the 1986 Tax Reform Act. We must take this…”

“I join Senator Mack in supporting his legislation to repeal Section 1706 of the 1986 Tax Reform Act. We must take this opportunity to repeal an unfair section of employment tax law which singles out only the computer and high-technology industry and makes it difficult for firms in that industry to retain the services of self-employed contractors. For many years, the common law test used to classify a worker as an employee or an independent contractor for employment tax purposes lacked precision and predictability. In 1978, in Section 530 of the 1978 Revenue Act, Congress acted to allow taxpayers, as an alternative to the common law test, to use a ``reasonable basis'' safe haven test to classify a worker. However, in 1986, Congress enacted Section 1706 which eliminated all Section 530 protections from only the technical services industry, and only in so-called ``three party situations'' in that industry in which a worker is paid by a technical service firm to perform services for a customer. I have heard from a number of computer consultants in Massachusetts who believe this unfairly discriminates against the computer consulting industry and seriously impairs the ability of legitimate self-employed computer consultants to work effectively in the marketplace.”