Stack was upset that §1706 did precisely what it was designed to do: Deprive him of the chance to exploit independent contractor status to avoid paying taxes through non-filing or through the understatement of income, overstatement of deductions, and avoidance of income tax withholding.
In spite of the overwhelming advantages attendant to employee status, Joe Stack desperately wanted to be treated as an independent contractor for one simple reason: It would have made his tax protesting easier.4
Footnotes:
¹ We have met many taxpayers who worked as independent contractors for years without so much as a peep of protest until they realized, ex post facto, that it might have better for them to have been treated as employees. In our experience, workers tend to be content with their independent contractor status until one of the following happens:
They get fired or quit
They get hurt on the job
They get sued for something they did while on the job
They need a bank loan (and employment verification)
² If Stack had been an independent contractor and was subsequently “fired” by his principal, my hunch is it would have taken him less time to file a claim for unemployment compensation than it takes Apolo Ohno to finish short track.
³ Indeed, §1706 was included in TRA ‘86 because the CBO had estimated that the government was losing up to 30% of taxes because independent contractors were either not reporting all of their income on their tax returns or were claiming fraudulent or questionable deductions against that income.
4 Like all tax protestors, Stack knew that once the IRS had collected his taxes through payroll withholding it would never give it back to him based on previously refuted tax protestor arguments. Consequently, his only chance of avoiding taxes was to control his own tax payments and then use his frivolous arguments to evade or at least defer paying taxes.
Enacted in 1978, §530 is a safe harbor law that lists several conditions which if met allows workers to be treated as independent contractors rather than employees.\n\n Joe Stack was compelled to burn his house down, murder his wife and children and fly his airplane into the side of a federal building because 24 years ago Congress passed and President Reagan signed into law the Tax Reform Act of 1986 that added sub-section (d) to §530 thereby excluding engineers and computer programmers from the safe harbor provisions of §530 .\n\nThe passage of this law (§1706 of the Tax Reform Act of 1986) did not as some have suggested make all engineers and computer programmers employees, it merely made them subject to the 20 factor common law test historically used for determination of a worker's status. In other words, had Joe Stack been truly independent from the company or companies to whom he provided services, he could have, should have and would have been treated as an independent contractor rather than an employee.
