Kit Bond

Mr. BOND

Mr. BOND. Madam President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. BOND. How much time?

Mr. BOND. Madam President, I send to the desk a second degree amendment to amendment No. 3482 on behalf of myself and Senator Mikulski.

Mr. BOND. I call for the regular order with respect to that amendment.

Mr. BOND. Madam President, I ask that amendment No. 3482 to the committee substitute amendment, previously debated and set aside, be called up.

Mr. BOND

Mr. BOND. Mr. President, I wish to announce that the Committee on Small Business will hold a hearing on ``HUB Zones: Revitalizing Inner Cities and Rural America'' on Thursday, March 21, 1996, at 10:30 a.m., in room 428A of the Russell Senate Office Building. For further information, please contact Paul Cooksey at 224-5175. select committee on indian affairs

Mr. BOND

Mr. BOND. Mr. President, I suggest the absence of a quorum.

Mr. BOND. Mr. President, I ask that those amendments be set aside.

Mr. BOND. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. BOND

Mr. BOND. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BOND

Mr. BOND. Mr. President, I ask unanimous consent that the Committee on Rules and Administration be authorized to meet during the session of the Senate on Wednesday, March 13, 1996, at 9:30 a.m., to hold a hearing on campaign finance reform.

Mr. BOND. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet at 2 p.m. on Wednesday, March 13, 1996, in open session, to receive testimony on the Defense authorization request for fiscal year 1997 and the future years defense plan.

Mr. BOND. Mr. President, I ask unanimous consent that the Committee on Energy and Natural Resources be granted permission to meet during the session of the Senate on Wednesday, March 13, 1996, for purposes of conducting a full committee business meeting which is scheduled to begin at 9:30 a.m. The purpose of this meeting is to consider pending calendar business.

Mr. BOND. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet at 9:30 a.m. on Wednesday, March 13, 1996, in closed/open session, to receive testimony on the Department of Energy atomic energy defense programs--Nuclear stockpile stewardship and management. The hearing will begin with the closed portion and attendance will be restricted to those with a ``Q'' clearance.

Mr. BOND. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on Wednesday, March 13, 1996 at 9:30 a.m. to hold an open hearing on intelligence matters.

Mr. BOND. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on Wednesday, March 13, 1996 at 1 p.m. SH-219 to hold a closed hearing on intelligence matters.

Mr. BOND. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to hold a business meeting during the session of the Senate on Wednesday, March 13, 1996 at 10 a.m.

Mr. BOND. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Wednesday, March 13, 1996, at 2 p.m.

Mr. BOND. Mr. President, I ask unanimous consent that the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, be authorized to meet during the session of the Senate on Wednesday, March 13, 1996 to hold hearings on the Global Proliferation of Weapons of Mass Destruction, part II.

Mr. BOND. Mr. President, I ask unanimous consent that the subcommittee on personnel of the Committee on Armed Services be authorized to meet at 10 a.m. on Wednesday, March 13, in open session, to receive testimony regarding the manpower, personnel, and compensation programs of the Department of Defense in review of the National Defense authorization request for fiscal year 1997.

Mr. BOND

Mr. BOND. Mr. President, I yield the floor.

Mr. BOND. I thank the Chair. (The remarks of Mr. Bond pertaining to the introduction of S. 1610 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

Mr. BOND

Mr. BOND. Mr. President, determining worker classification is one of the most important tax issues facing small business today. Indeed, and in fact, it was rated No. 1 by the delegates to the White House Conference on Small Business. They said this is something that must be dealt with because the ambiguity in the current law makes it extremely difficult for business owners to determine whether a worker is an independent contractor or an employee. Today I will be introducing the Independent Contractor Tax Simplification Act on behalf of myself, Senator Nickles, Senator Dole, Senator D'Amato, Senator Murkowski and Senator Lott. For years, now, the Internal Revenue Service has used a 20-factor common law test to determine worker status. Frankly, the test is a nightmare of subjectivity and unpredictability for small business owners who often get their tutorial on the subtleties of the issue during an IRS audit--certainly an unfortunate time to be learning how tricky the law is. IRS agents are required to consider 20 different factors to determine whether an employer/employee relationship exists. The problem is that the small business taxpayer is not able to predict which of the 20 factors is going to be more important to a particular IRS agent, and finding a certain number of these factors present in a case does not always determine the result. Inevitably, what has been happening is that agents are resolving far too many cases in favor of the IRS and its tendency to find the existence of an employment relationship at the expense and disruption of bona fide independent contractor arrangements. Let me make perfectly clear, the IRS has every right to obtain information on payments, whether they are made to an employee or to an independent contractor. It is our position that simplifying IRS collection does not warrant the IRS going beyond tax law to determine business organization, so long as the organizations are legitimate structures and the IRS has the information on payments so they may collect appropriate taxes. This lack of a clear standard in existing law has made some small business owners reluctant to hire independent contractors and put others in great concern and risk of being pursued for back taxes. In some cases, the concern is so great that it stifles business expansion. As I indicated earlier, the depth of the problem was made clear last summer when the White Conference on Small Business, a nationwide group of almost 2,000 small business delegates, voted the independent contractor issue first on its list for recommended changes. Today, together with Senator Nickles and the other Senators whom I mentioned, Senator Nickles having been a long and consistent supporter of small business legislation, we introduce a bill that solves this problem. Our bill provides a short list of simple, clear objective standards that will allow all taxpayers to understand what the law says about who is an employee and who is an independent contractor. When this law is enacted, IRS agents will have clear direction, small business will have clear direction, but the IRS will no longer have the upper hand in today's confusing independent contractor law, which gives the IRS agent, when they deal with our country's small business taxpayers, advantage in determining their business organization. I especially thank Senator Nickles for his willingness to allow us to work on this bill together. Last September at a hearing, I held in the Small Business Committee, Senator Nickles testified about his personal experience with this issue dating back to the small business that he began while he was a college student. For Senator Nickles' company, like many startup companies and small businesses, it seemed to make perfect sense to hire independent contractors in certain situations. More established, larger businesses also need to hire independent contractors to accomplish specific tasks that may require specialized skill. In fact, many of America's entrepreneurs are in business as independent contractors whose livelihood is dependent upon the fact that other companies need their service and expertise. These entrepreneurs have no desire, nor do they have any need, to become employees of the businesses who purchase their services. Others in our Small Business Committee hearing testified about their experiences with IRS agents regarding worker status, telling us about receiving IRS penalties as high as a quarter of a million dollars. Between these outrageously high penalties and the complexity of the 20- factor test, this issue, understandably, infuriates many small business taxpayers. Mr. President, the Commissioner of Internal Revenue, the Honorable Margaret Richardson, in a speech to last summer's small business conference delegates, told them the IRS does not care whether someone is an employee or independent contractor, as long as they properly report their income, and that is as it should be. Yet, the IRS continues to pursue this issue fiercely during its audits. It has been reported that in a recent 4-year span, the IRS reclassified 338,000 workers as employees. The same report indicates the IRS prevails in 9 out of 10 worker classification audits. Little wonder when they have the upper hand with a very confusing, very complex 20-factor test. Just last week, I received a copy of the ``Revised Internal Revenue Service Worker Classification Training Materials.'' This was distributed by Commissioner Richardson. In her memo accompanying the document, she describes the purchase of the document as an attempt to identify, simplify and clarify the factors that should be applied in order to accurately determine worker classification. There could be no more compelling justification for the importance of our immediate passage of the legislation than this document. We commend Commissioner Richardson for seeking to simplify, but this document is over 100 pages long. If it takes that much paper and that much ink to instruct IRS agents on how to simplify and clarify a small business tax issue, I think we can be pretty sure how simple and clear it is going to seem to the taxpayer sitting across the desk from an IRS agent during an audit. As those who follow this issue know, what makes this problem especially frustrating is that unlike most interpretive actions of the IRS where they must determine the proper amount of income or deductions so Treasury can collect the amount of tax legally due to it, the independent contractor issue is not about how much tax the Government receives. The classification decision does not alter aggregate tax liability to the Government at all. This problem exists because of IRS's apparent desire to recast economic relationships between private parties that these parties have already determined for themselves. The Independent Contractor Tax Simplification Act will help move the IRS out of its de facto role of setting employment policy and back into its role of revenue collection. Our bill sets out three simple questions to be asked in determining whether a person providing services is an employee or independent contractor. First, is there a written agreement between the parties? Second, does it appear the worker has made some investment, such as incurring substantial unreimbursed expenses or being paid primarily on a commission basis? Third, does the worker appear to have some independence, such as having his or her own place of business? In other words, under this bill, if there is a written contract between the parties and if basic investment and independence criteria are met, then the worker is an independent contractor. Plain, simple, predictable. Fine. To take advantage of this simple rule, the party must properly report payments above $600 to the IRS just like under current law. This ensures all taxes properly due to the Treasury can be collected. The legislation is written to provide immediate clarification and relief to taxpayers undergoing IRS examinations currently. The change, no doubt, would save many businesses from a protracted and expensive battle with IRS. For some, it may even save the business. When we in Congress find an opportunity to take action in a tax area so strongly supported by many small businesses, and when it is one that does not involve any loss to the Federal Treasury, we should act without delay. I am confident the Finance Committee can find an acceptable revenue offset for this worthy purpose to the extent that any revenue is lost. The revenue estimate for the bill should be fairly simple, reflecting the bill's provisions that assure continued collection of all taxes due the Federal Government. Small businesses cannot afford to wait any longer for resolution of this problem, and they should not be expected to do so. They have waited for decades. We now have a bill that will solve the problem. The companion bill has been introduced in the other body. I am told it has over 200 cosponsors. It is time Congress steps up to the plate and delivers for small business. I urge members of the Finance Committee to work with Senator Nickles and others to report out a bill that provides this much-needed change. Mr. President, I ask unanimous consent to have printed in the Record a copy of the bill, a section-by-section analysis and copies of some letters of support for the bill we have received. I also ask unanimous consent that Senators Dole, D'Amato, Lott, Murkowski, and Inhofe be shown as original cosponsors.

Mr. BOND

Mr. BOND. Mr. President, I applaud the Senate for passing S. 1494, the Housing Opportunity Program Extension Act of 1995. I also want to thank my cosponsors, including Senators D'Amato, Mack, and Sarbanes. This legislation provides critical authority for a number of community development and affordable housing programs and activities which are strongly supported by the American public. This bill also is an important step in reforming HUD's housing and community development programs, and is consistent with a number of significant reforms which were initiated in the VA/HUD fiscal year 1996 appropriations bill, which was vetoed by the President. Most importantly, this legislation adopts the reformed low-income housing preservation program which was contained in the VA/HUD fiscal year 1996 appropriations bill vetoed by the President. There are approximately 75,000 to 100,000 low-income units in the preservation pipeline that are eligible for prepayment but also remain eligible candidates for preservation funding. These units have been in the preservation processing pipeline for some time, often years, and include a mix between equity take-out deals for owners which are financed through long-term section 8 assistance, and the financing of purchases by tenant groups and nonprofits. This reform would replace the existing preservation program, with its long-term dependence on expensive project-based section 8 assistance, with a capital loan--or capital grant in the case of purchasers, that ensures low-income use at the minimum cost to the Federal Government. S. 1494 also would provide clear statutory guidance to empower PHA's and assisted property owners with the tools to screen out and evict from public and assisted housing persons who illegally use drugs or whose abuse of alcohol is a risk to other tenants. I cannot emphasize enough the need to take responsible and meaningful action to preserve our low-income housing from criminal and destructive activities. In addition, this legislation addresses the problem of mixed housing where the elderly and the disabled, including persons with drug and alcohol disabilities, are warehoused in the same public housing projects. This does not work, and I am particularly troubled by some horror stories I have heard where elderly tenants have been harassed and frightened by young tenants with significant drug abuse problems. This provision would provide PHA's with clear authority to establish elderly- and disabled-only housing. Moreover, S. 1494 would extend a number of other key housing programs which need affirmative legislation to operate: permit the renewal of expiring section 8 moderate rehabilitation contracts; permit CDBG homeownership assistance; extend the Home Equity Conversion Mortgage [HECM] Program; extend the FHA multifamily mortgage risk-sharing programs; and reauthorize the National Cities in School Program and the National Community Development initiative. This bill also would establish a new loan guarantee program for rural multifamily housing which terminates after 1 year and is supported by a $1-million credit subsidy under the Agriculture fiscal year 1996 appropriation bill, as enacted. This program is needed in rural areas where there is a critical need to develop affordable low-income rental housing. Finally, the legislation would establish a new Habitat for Humanity initiative. Habitat for Humanity is one of the best models in this country for the development of affordable low-income housing through sweat equity. Since 1976, Habitat has constructed over 40,000 homes worldwide, in every U.S. State and in 45 other countries. As a consequence, some 250,000 people are living in decent, safe, and affordable housing. Mr. President, this legislation is bipartisan, simple, straightforward and necessary. I look forward to this measure becoming law.

Mr. BOND

Mr. BOND. Mr. President, on behalf of the majority leader I would like to announce that today there will be a period for morning business until the hour of 9:30 a.m., with Senators permitted to speak for up to 5 minutes each with the following exception: Senator Bond for up to 10 minutes. At 9:30, the Senate will resume consideration of the continuing appropriations bill. At that time there will be 30 minutes of debate between Senators Hutchison and Reid regarding the pending endangered species amendments. Following that debate, those amendments will be set aside and Senator Dole will be recognized to offer an amendment. Under a previous order, at 1 p.m. the Senate will begin 1 hour of debate on the motion to proceed to the Whitewater Committee resolution with a cloture vote beginning at 2 p.m. Following that cloture vote, there will be a vote on the motion to table the Hutchison amendment to the continuing resolution. Senators should be reminded of those votes beginning at 2 p.m., and Senators should be aware that a late night session is possible in order to complete action on that measure. It is also hoped that the Senate may still reach an agreement with respect to the small business regulatory relief bill.