Coalition Submits Statement for the Record: Hearing Before the U.S. House of Representatives, Committee on Ways and Means

Table of Contents

Cover Page

Introduction

Part I
Clarifying the Confusion Surrounding Section 530
of the Revenue Act of 1978

Part II
Current Requirements of Section 530 Provide Adequate Protection
against Potentially Abusive Application of the Provision

Part III
Independent Contractors Who Receive Forms 1099
are Not a Material Cause of the Tax Gap

Part IV
Unappreciated Plight of Lower-Skilled
Independent Contractors, Weekend Freelancers

Part V
Philosophically Charged Reclassification Efforts Undermine
Individual Integrity and Frustrate Compliant Businesses

Part VI
Defining the End Game for Entrepreneurship in America

*****

Cover Page

Statement for the Record

Hearing Before the U.S. House of Representatives Committee on Ways and Means

Subcommittee on Income Security and Family Support

Subcommittee on Select Revenue Measures

May 8, 2007

Russell A. Hollrah
Executive Director
Coalition to Preserve Independent Contractor Status
www.iccoalition.org

1850 K. Street, N.W.
International Square
Suite 390
Washington, D.C. 20006
(202) 659-0878
rhollrah@iccoalition.org

Introduction

Chairmen McDermott and Neal, Ranking Members Weller and English and Members of the Committee, the Coalition to Preserve Independent Contractor Status (the “Coalition”) appreciates the opportunity to submit these comments in connection with the May 8, 2007, hearing before the Committee concerning independent contractors.

The Coalition was formed by businesses, associations and individuals who value an individual’s right to offer his or her services as a self-employed independent contractor and are concerned about potential developments that could undermine that right. I am Executive Director of the Coalition and also a practicing attorney. For more than fifteen years, I have devoted my legal practice predominantly to representing entities in a wide range of industries in establishing and defending independent-contractor relationships of various types.

The following comments reflect both the research that the Coalition has undertaken in this area as well as my many years of experience in dealing with federal and state government agencies in their efforts to properly classify service providers as employees or independent contractors.

Part I: Clarifying the Confusion Surrounding Section 530 of the Revenue Act of 1978

Testimony offered at the hearing grossly distorts the application of Section 530 of the Revenue Act of 1978 (“Section 530”). The allegation was made that companies that misclassify individuals as independent contractors can obtain protection in doing so by simply convincing at least 25 percent of their industry colleagues to join in the misclassification.  For the reasons set forth below, that allegation is incorrect.

Before addressing the technical operation of Section 530, it is important to appreciate the reason why the provision was enacted. Section 530 was enacted “to alleviate what was perceived as overly zealous pursuit and assessment of taxes and penalties against employers who had, in good faith, misclassified their employees as independent contractors.”1)Boles Trucking, Inc. v. United States, 77 F.3d 236,239 (8th Cir. 1996). Section 530 was temporarily extended twice and then extended indefinitely by § 269 of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, 96 Stat. 324, 552, § 269. Section 530 was never codified.

A. Section 530 – An OverviewSection 530 established relatively objective criteria that, if satisfied, would protect a business in its treatment of service providers as independent contractors. To qualify for Section 530 protection, a taxpayer must satisfy three requirements, namely, (i) it must comply with Form 1099 reporting requirements with respect to the covered workers,2)Section 530(a)(1)(B).  (ii) it must never have treated any worker holding a position substantially similar to the covered workers as an employee for federal employment-tax purposes (the “substantive consistency requirement”),3)Section 530(a)(1)(A) and (a)(3). and (iii) its treatment of the covered workers as independent contractors must be in reasonable reliance on what is commonly referred to as a “reasonable basis”.4)Section 530(a)(1) and (2). Reasonable basis can be established in various ways,5)Section 530(a)(2). one of which is by establishing that the treatment is in reasonable reliance on a long-standing practice of a significant segment of an industry. 6)Section 530(a)(2)(C).

B. The Form 1099 Reporting Requirement of Section 530
Of the three requirements of Section 530, Form 1099 compliance is admittedly not problematic.  To satisfy this requirement, a business need only report the payments made to workers whom it treats as independent contractors on Forms 1099.

C. The Substantive Consistency Requirement of Section 530

The substantive consistency requirement, however, can be highly problematic. Judicial decisions have made clear that this requirement has no de minimi exception.7)See, e.g., Institute for Resource management, Inc. v. United States, 90-2 U.S.T.C. ¶50,586 (Cl. Ct. 1990). This means that if a company were to treat so much as one individual as an employee for one hour of service (by reporting the compensation paid to the individual for that one hour on a Form W-2), such treatment would forever disqualify the company from Section 530 protection with respect to not only that specific individual but also any other individual who holds a position substantially similar to the position held by that individual.

To make it even more difficult for a company to qualify for Section 530 protection, the substantive consistency requirement looks back all the way to 1978. Thus, if a company treated a worker as an employee for any tax period beginning after December 31, 1977, that treatment would forever disqualify the company from Section 530 protection with respect to any individual holding a position substantially similar to the position held by that worker. Furthermore, the provision also takes into account predecessor businesses. Thus, if one business treats an individual as an employee, that violation of the substantive consistency requirement would disqualify not only that business but also any successor business.

It follows that quite contrary to the testimony offered on this issue at the hearing, a company that treats an individual as an employee for federal employment-tax purposes cannot simply reclassify that individual to independent-contractor status and convince other businesses to follow suit and then qualify for Section 530 protection – because neither the company nor the other businesses that also reclassified similar workers as independent contractors could satisfy Section 530’s substantive consistency requirement.

D. The Requirements of the “Industry Practice” Safe Harbor

The statutory requirements of the “industry practice” reasonable basis betray yet another flaw in the explanation of Section 530 that was given at the hearing. This particular reasonable basis can be established if a taxpayer’s treatment of an individual as an independent contractor was in reasonable reliance on a long-standing recognized practice of a significant segment of the industry in which such individual was engaged.8)Section 530(a)(2)(C). The Small Business Job Protection Act of 1996, Pub. L. No. 104-188, § 1112(a), 110 Stat. 1759, clarified the requirements of this particular reasonable basis by amending Section 530 to provide that the requirement that an industry practice be “long-standing” shall not be construed as requiring the practice to have continued for more than 10 years.9)Section 530(e)(2)(C). Thus, for an industry practice of treating a particular type of worker as an independent contractor to qualify as long-standing, for purposes of Section 530, the treatment must have continued for approximately 10 years.

It follows that even if – as the hearing testimony suggests – a company could convince its competitors to reclassify a certain type of worker to independent-contractor status, Section 530 protection would not become available, assuming the other Section 530 requirements also are satisfied, until after the passage of approximately 10 years following the date on which the other competitors joined in the reclassification, in order for the industry practice to qualify as “long standing”.  The realistic probability of this actually occurring, moreover, is remote, because the other competitors would likely be reluctant to reclassify individuals from employee status to independent-contractor status, as they would be ineligible for Section 530 protection with respect to the reclassified workers because they could not satisfy the substantive consistency requirement (for the reasons discussed above).

E. The Requirement that Reliance on a Safe Harbor be “Reasonable”

A final defect in the oversimplification of the “industry practice” safe harbor of Section 530 that was offered at the hearing is its failure to consider the requirement that a taxpayer’s reliance on a safe harbor be “reasonable.”10)

E.g., Marlar, Inc. v. United States, 151 F.3d 962, 966; 1998 U.S. App. LEXIS 17764 (9th Cir. 1998). The court explained:

As an initial matter, we must agree with the government that, under § 530, any reliance on industry practice must be “reasonable.” As Congress provided, in no uncertain terms:

[A] taxpayer shall in any case be treated as having a reasonable basis for not treating an individual as an employee for a period if the taxpayer’s treatment of such individual for such period was in reasonable reliance on any of the following:
. . . .
(C) long standing recognized practice of a significant segment of the industry in which such individual was engaged.

Revenue Act of 1978, § 530(a)(2) (emphasis added). The text unmistakably requires “reasonable reliance,” not just mere reliance. When “the statute’s language is plain, ‘the sole function of the courts is to enforce it according to its terms.'” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 103 L. Ed. 2d 290, 109 S. Ct. 1026 (1989) (quoting Caminetti v. United States, 242 U.S. 470, 485, 61 L. Ed. 442, 37 S. Ct. 192 (1917). ).

This means that a company’s reliance on a safe harbor for purposes of treating an individual as an independent contractor will not be respected for purposes of Section 530 unless that reliance is reasonable.

It follows that the testimony at the hearing suggesting that even clearly incorrect misclassifications of individuals as independent contractors could nonetheless be protected by Section 530 ignores the requirement that a taxpayer’s reliance on a safe harbor be “reasonable”.

F. Current Requirements of Section 530 Provide Adequate Protection against Potentially Abusive Application of the Provision

As the foregoing demonstrates, the actual requirements a business must satisfy in order to qualify for Section 530 protection provide ample protection against the blatant misuse of the provision that was described at the hearing.

Discussions of Section 530 often elicit more heat than light.  Those who are opposed to independent-contractor status find Section 530 vexing because it actually works very well in protecting taxpayers that in good faith treat an individual as an independent contractor and have a reasonable basis for doing so.  Efforts to discredit Section 530 by offering up wild and flagrant worker misclassifications that Section 530 allegedly protects should be scrutinized; such offerings commonly fail to consider all of the requirements the Congress imposed for Section 530 protection to be available.  In other words, Section 530 sets forth clear and adequate standards for independent-contractor classification.  Misclassification of employees as independent-contractors, if and when it occurs, can best be counteracted by more effectively enforcing Section 530, rather than by amending it or passing redundant legislation.

Part II: Independent Contractors Who Receive Forms 1099 are Not a Material Cause of the Tax Gap

Testimony at the hearing was also imprecise concerning the alleged tax gap attributable to independent contractors. In this context, the term tax gap refers to the difference between federal taxes owed and the amount of federal taxes that are paid voluntarily and on time.11)See, e.g., GAO Tax Compliance: Opportunities Exist to Reduce the Tax Gap Using a Variety of Approaches, GAO-06-1000T (July 26, 2006).

It was suggested at the hearing that the federal government could raise significant additional tax revenues by curtailing the availability of independent-contractor status, on the premise that independent contractors are principally scofflaws when it comes to paying their taxes. Actually, the data paint a very different picture. According to recent testimony by the Government Accountability Office:

Past IRS data have shown that independent contractors report 97 percent of the income that appears on information returns, while contractors that do not receive these returns report only 83 percent of income.12)GAO Making Significant Progress in Improving Tax Compliance Rests on Enhancing Current IRS Techniques and Adopting New Legislative Actions, GAO-06-453T (February 15, 2006).

IRS data also indicate that employees who receive Forms W-2 generally report 99 percent of the income appearing on those forms.13)E.g., IRS National Headquarters Office of Research, Interactive Tax Gap Map for Year2001, 22-23 (Feb. 24, 2004). Thus, the likely enhanced compliance to be gained by converting independent contractors who receive Forms 1099 to employees will be in the range of two percent.

The Coalition submits that the marginal increase in tax revenues attributable to this modest improvement in compliance would be eclipsed by the much larger corresponding reduction in tax revenues attributable to independent contractors electing to close their business rather than work as an employee, or being forced to close their business due to clients’ refusal to continue doing business with them if required to treat them as employees for federal tax purposes.

Rather than pursuing a broad campaign aimed at reclassifying independent contractors to employees, the Coalition submits that a better approach would be to increase the level of Form 1099 information reporting among independent contractors.  The 14 percentage-point gap (97% – 83%) between those with and without Form 1099 reporting arguably is material. Enhancing information reporting would improve compliance without undermining entrepreneurial activity.

Part III: The Advisability of Ending the Demonization of Independent Contractors

During the past several years, it has become increasingly fashionable to demonize independent-contractor status as a sinister scheme concocted by businesses to unfairly oppress vulnerable service providers.  That characterization has gained traction through two types of highly anecdotal news stories.  In one type, individuals are actually misclassified as independent contractors.  In the other, individuals are paid cash “under the table.”  In both cases, the action is already proscribed and the solution lies in better enforcement of existing laws, rather than in demonizing legitimate entrepreneurs who prefer the independence and profit potential of independent-contractor status.  Unfortunately, as a result of such stories independent contractors gradually become viewed as inherently evil. Once that happens, situation ethics takes over, and some deem it acceptable to use any means available, whether legitimate or not, to pursue the perceived worthy and noble goal of eliminating independent contractors.

The Coalition submits that we already have arrived at the point where situation ethics reigns free, and some elected and unelected government officials feel justified, even proud, to attack independent contractors through any means available. Somewhat ironically, as states increase the intensity of their efforts to reclassify independent contractors to employee status, the number of individuals joining the entrepreneurial ranks of the self employed continues to increase. As the U.S. Government Accountability Office testified at the hearing, independent contractors, as a percentage of the total employed workforce, grew from 6.7 percent in 1995 to 7.4 percent in 2005; in 2005, there were 10.3 million independent contractors.

The Coalition believes it important to emphasize that the effects of the increasingly negative perception of independent contractors appears to be confined largely, if not exclusively, to state government agencies.  We have not experienced a philosophically driven approach to these matters by the Internal Revenue Service; rather, our experience before the Internal Revenue Service continues to be one where worker-classification disputes appear to be handled objectively and based purely on the law. As described below, however, at the state level the environment is much different.

For example, on April 4, 2006, New Jersey Governor Jon Corzine proudly announced a major crackdown on workers misclassified as independent contractors.  In a Memorandum the Governor released that date, he exclaimed that “Workers who are improperly classified suffer an economic disadvantage and are involuntarily disenfranchised from the benefits provided to individuals classified as employees.” To pursue this goal while “conserv[ing] State resources’ the Governor authorized the New Jersey Division of Taxation to “use Labor Department auditors” findings of worker misclassification to make gross income tax liability determinations.”

The Governor apparently was not bothered by the fact that Labor Department determinations would be made under a very narrow definition for independent-contractor status, while a broader definition applies for purposes of New Jersey income taxes – which means that individuals who cannot qualify as independent contractors for purposes of unemployment taxes might still qualify for income-tax purposes.  Thus, the Governor’s program – in an effort to conserve State resources – will cause many taxpayers to incur needless expense and burdens in defending against income-tax assessments that were based on worker reclassifications made under a different statute.  This glossing over of important legal distinctions illustrates the dark side of a growing perception at the highest levels of state government that reclassifying independent contractors to employee status – through any means available – is per se virtuous.

A few months later, on July 10, 2006, Kansas Governor Kathleen Sebelius announced a similar joint effort by the Kansas Department of Revenue and Department of labor to pursue companies that misclassify workers as independent contractors.  The clear message from the Kansas Governor was that independent contractors are an evil that the state needs to eradicate.

The loathsome characterization of independent-contractor status has also penetrated the career professionals of state agencies. In a recent dealing with the department responsible for administering the unemployment program for a state, a company was contacted based on a claim for unemployment submitted by one individual.  A department representative, based on a ten minute conversation with the company, decided that the claimant and all similarly situated individuals needed to be reclassified to employee status.  When asked to explain the rationale for the determination, the representative offered an explanation based on a prior statutory definition of independent contractors that had been repealed and replaced with a more taxpayer-friendly test. When the taxpayer pointed out that the determination was made under the wrong test, the representative acknowledged the mistake but advised that if the company disagreed with the conclusion, it could pursue an appeal!  Appeals are expensive and time-consuming. Requiring a business to pursue an appeal in order to obtain a decision under the proper legal test is unjustifiable. Yet, this is the environment in which companies that contract with independent contractors must operate today.

The Coalition respectfully urges the Congress to take the lead in toning down the rhetoric against independent contractors. While the Coalition welcomes an objective assessment of independent contractors and supports inquiries into areas where problems have been identified, we believe it is inappropriate to create an impression that independent contractors as a group are tax cheats or are an oppressed population of service providers.  The Congress is uniquely positioned to affect this debate and to reinforce the fact that independent contractors are an important and positive component of our country’s economy.

Part IV: Unappreciated Plight of Lower-Skilled Independent Contractors, Weekend Freelancers

While testimony offered at the hearing suggests that companies misclassify individuals as independent contractors in order to avoid their legal obligations and to otherwise oppress them, that characterization is an overly broad generalization that is based on isolated instances.  Moreover, it ignores many sectors of the economy where independent-contractor status offers an avenue of escape for individuals seeking opportunities other than employment.

A. Home Care Workers

One industry in which this is true is home care. Employee-based home-care agencies typically lock in their employee staff of caregivers at specified wage rates and then sell their services to the highest bidder. If an agency hires a caregiver at $7 or $8 per hour, it might sell those services at $15 or $16 per hour and keep the difference. Caregivers understand this and many feel entitled to a larger portion of a client fee, since they are the ones who actually perform the work.14)Interestingly, studies show that many consumers of home-care services prefer obtaining care from a freelance caregiver than from a caregiver employed by an agency.See, e.g,. Benjamin, Mathias and Franke, Comparing Consumer-directed and Agency Models for Providing Supportive Services at Home, Vol. 35 Part II, Health Services Research No. 1 Selected Papers From the Association for Health Services Research Annual Meeting (April 2000) at 351, et seq. Even the U.S. Department of Health and Human Services has identified the strong consumer preference for obtaining home-care providers on their own, as opposed to through an employee-based agency, and has allocated federal funds to support this consumer preference.

For these caregivers, the principal avenue of escape from these conditions is to offer their services as independent contractors. Because it is difficult for individual caregivers to obtain continuous work on their own, they commonly sign up with several caregiver registries. Registries represent self-employed caregivers, provide them with an independent background screen and credential verification and help them market their services to potential clients. For these services, the registry charges a caregiver a modest fee. Caregiver registries empower caregivers to compete directly against the employee-based agencies.  Independent-contractor status offers these caregivers the opportunity to select their own clients and to earn higher fees by setting their own rates. It also offers them the freedom to choose when, where and for whom to work.

Because caregiver registries create a market for freelance caregivers and enable them to operate outside the employee-based agency construct, the employee-based agencies view registries as a threat and have been lobbying state legislatures to regulate them out of existence.  Part of their lobbying strategy has been to build on the anti-independent-contractor hysteria to urge elected state representatives to eliminate the independent-contractor option for caregivers. If they succeed, the caregivers will be denied the opportunity to gain more control over their work life and forced to accept whatever wages the employee-based firms are willing to pay them.  For these caregivers, the government’s efforts to “help” them, by denying them the option of self employment, serves only to deny them the opportunity to take control of their financial destiny and make more money.

B. Weekend Freelancers

Another type of independent contractor who is being damaged by the anti-independent-contractor fervor that pervades state government agencies is the individual who has a full-time job during the week and is seeking to supplement the family income by pursuing an entrepreneurial endeavor during the evenings and weekends.

Some states take the position that it is not possible for an individual with full-time employment to also have an independent business and qualify as an independent contractors for purposes of unemployment taxes.

Others states contend that an individual cannot be recognized as an independent contractor for unemployment-tax purposes without having at least two clients. This policy puts independent contractors in the anomalous predicament of subjecting their first client to an unemployment-tax liability but only until the individual obtains a second client. One unfortunate example of such a state’s policy occurred in the context of an unemployment-tax audit of a business. At the conclusion of the audit, the department agreed to permit all but one of a class of workers to remain as independent contractors. The department required that the one individual be reclassified because that individual had no other clients. That individual was just starting out, and the company being audited was the individual’s first client. Because the company operates on an independent-contractor business model, and was very concerned about the impact in other contexts of agreeing to prospectively pay unemployment taxes on one individual who performs services that are similar to services performed by other independent contractors, it elected not to engage that individual for any subsequent projects.  The end result is that the individual who was just starting out was effective put out of business by the state agency.

Part V:  Philosophically Charged Reclassification Efforts Undermine Individual Integrity and Frustrate Compliant Businesses

Another little-appreciated consequence of government agencies pursuing independent-contractor reclassifications is the impact its actions can have on the integrity of the service providers being reclassified.  A phenomenon particularly commonplace at the state level involves individuals who represent themselves as being self-employed, read and execute independent-contractor agreements and make affirmative representations that they have other clients, that they have made specific investments in their business and that they possess other indicia of self-employment.

At the end of an engagement, some of these same individuals file for unemployment benefits. In many of these cases, an individual will file an unemployment claim on the mistaken belief that such benefits are available to independent contractors.  On numerous occasions, the state agencies, rather than explain to the claimants their misunderstanding of the unemployment system, entice them to recant their representations to independent-contractor status in order to qualify for unemployment benefits.  This leads the claimants into a highly undesirable ethical dilemma: should they reaffirm their representations and not receive unemployment benefits, or recant their representations and receive the benefits?  The Coalition submits that the practice of government agencies actively encouraging their citizens to recant their representations -“ on the demeaning assumption that the individual made any representations requested only out of the desperate need for a job – is deplorable. It causes such citizens to lose faith in their government, in the sanctity of the rule of law and worst of all in themselves.

The type of entities most vulnerable to these antics are registries and brokers that contract with independent contractors and offer them client opportunities in exchange for a fee. These entities deal with large numbers of independent contractors and sometimes rely upon the representations made by individuals to differentiate between bona fideindependent contractors and individuals who are actually seeking employment. While state agencies commonly dismiss written documents as nothing more than “employers” coercing “employees” to sign them in order to avoid the obligations imposed on employment relationships, registries and brokers rely upon good-faith and honest representations made by individuals to inform their decision whether an applicant actually is an independent contractor and would be an appropriate individual to represent.

As noted, the principal reason state agencies feel justified in their complicity with these antics is the pejorative connotation currently associated with independent-contractor status. The Congress has an opportunity to change this; it has the power to substantially influence the perception of independent-contractor status by acknowledging the legitimacy of independent contractors as a workforce segment and the high value they add to our economy.

Part VI: Defining the End Game for Entrepreneurship in America

The Coalition urges that any contemplated change to current laws affecting independent contractors be considered in the broader context of how the change could affect the continued viability and vitality of the entrepreneurial sector of our nation’s economy. It is inadvisable to overly generalize about independent contractors by perceiving them as individuals under the oppressive yoke of a de facto employer or as a group of individuals who uniformly do not pay their taxes.

The vast majority of independent contractors with which we have come into contact are individuals who pay their taxes and are pursuing self-employment as a matter of free choice, to supplement their family income or to retain control over when, where, how and to whom they offer their services.  Moreover, we submit that when legitimate problems of independent-contractor status do arise, the first reaction should not be to pass a law that solves the problem but to examine existing laws to see if they already do so.  If so (and we observe that this is almost always the case), the problem is not one of inadequate laws but of insufficient enforcement.  New legislation passed in place of better enforcement has the inevitable impact of unduly targeting and encumbering legitimate independent contractors.

The Coalition looks forward to working with the Congress in developing constructive ideas for reducing the tax gap while preserving and supporting the vibrant sector of our nation’s economy comprising self-employed entrepreneurs.

References   [ + ]

1. Boles Trucking, Inc. v. United States, 77 F.3d 236,239 (8th Cir. 1996). Section 530 was temporarily extended twice and then extended indefinitely by § 269 of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, 96 Stat. 324, 552, § 269. Section 530 was never codified.
2. Section 530(a)(1)(B).
3. Section 530(a)(1)(A) and (a)(3).
4. Section 530(a)(1) and (2).
5. Section 530(a)(2).
6, 8. Section 530(a)(2)(C).
7. See, e.g., Institute for Resource management, Inc. v. United States, 90-2 U.S.T.C. ¶50,586 (Cl. Ct. 1990).
9. Section 530(e)(2)(C).
10.

E.g., Marlar, Inc. v. United States, 151 F.3d 962, 966; 1998 U.S. App. LEXIS 17764 (9th Cir. 1998). The court explained:

As an initial matter, we must agree with the government that, under § 530, any reliance on industry practice must be “reasonable.” As Congress provided, in no uncertain terms:

[A] taxpayer shall in any case be treated as having a reasonable basis for not treating an individual as an employee for a period if the taxpayer’s treatment of such individual for such period was in reasonable reliance on any of the following:
. . . .
(C) long standing recognized practice of a significant segment of the industry in which such individual was engaged.

Revenue Act of 1978, § 530(a)(2) (emphasis added). The text unmistakably requires “reasonable reliance,” not just mere reliance. When “the statute’s language is plain, ‘the sole function of the courts is to enforce it according to its terms.'” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 103 L. Ed. 2d 290, 109 S. Ct. 1026 (1989) (quoting Caminetti v. United States, 242 U.S. 470, 485, 61 L. Ed. 442, 37 S. Ct. 192 (1917). ).

11. See, e.g., GAO Tax Compliance: Opportunities Exist to Reduce the Tax Gap Using a Variety of Approaches, GAO-06-1000T (July 26, 2006).
12. GAO Making Significant Progress in Improving Tax Compliance Rests on Enhancing Current IRS Techniques and Adopting New Legislative Actions, GAO-06-453T (February 15, 2006).
13. E.g., IRS National Headquarters Office of Research, Interactive Tax Gap Map for Year2001, 22-23 (Feb. 24, 2004).
14. Interestingly, studies show that many consumers of home-care services prefer obtaining care from a freelance caregiver than from a caregiver employed by an agency.See, e.g,. Benjamin, Mathias and Franke, Comparing Consumer-directed and Agency Models for Providing Supportive Services at Home, Vol. 35 Part II, Health Services Research No. 1 Selected Papers From the Association for Health Services Research Annual Meeting (April 2000) at 351, et seq. Even the U.S. Department of Health and Human Services has identified the strong consumer preference for obtaining home-care providers on their own, as opposed to through an employee-based agency, and has allocated federal funds to support this consumer preference.

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