I’ve taken a break this week from my Solutions series to, once again, deal with the audits that are pummeling local Contractors in the State of Maine. I’ve been very strident and forceful in my efforts to bring attention to what I believe is a travesty against the hard working residents of Maine. I’ve even gone as far as to call these attacks on these local businesses unlawful and illegal. To that point, I wish I were right.
With further investigation, the truths that are being unearthed are dark and unsettling, to put it mildly. A fellow contractor and friend of mine, Toby Arno, has been doing the bulk of the research that I now bring to you. Again, I wish I could say that what is going on is illegal. I wish that I could say that there are laws in place that protect hard working residents and these are being violated. Unfortunately, I cannot.
The murky waters of liberal legislation have been stirred enough, by Mr. Arno’s efforts, that some cruel revelations have surfaced from its stagnate depths. In the 1978 Revenue Act, Section 530, a loophole was created called the “Safe Harbor Provision”. This provision allowed companies to indefinitely maintain independent contractors as sub-contractors as long as these companies had reason to believe these contractors were independent. This common sense provision, amazing for government, was created to acknowledge that companies, with extended projects that require extended relationships, would need to have a provision to protect sub-contractors from being mislabeled as employees.
For instance, if a general contractor has multiple building projects in which he may need to maintain his sub-contractors for several years, he may during that time be providing a 100% of their employment. This in no wise invalidates their status as independent as they are free to find different employment if they so choose and will move on to different contracts at the completion of this larger one. One would assume this is a reason why the “Safe Harbor Provision” was implemented.
President Obama, at the onset of his Presidency, made it a “priority” to bring “litigation” against independent contractors. He closed and eliminated the “Safe Harbor Provision”. He then set up a Misclassification Task Force. The initial budget for this task force was 25 million dollars. Mr. Arno and I have learned from sources within the Federal Government that, since there was no money to fund this task force, they used, you guessed it, stimulus dollars to fund this. How do you like that, Contractors? Your tax money is being used to put you out of business. So laws that were meant to protect are now used to attack the citizens of this great Nation.
Now, for the standards we are judged by. Actually, they change with the wind. As many contractors can attest, the aforementioned Shelliejo Merrill changes the compliance criteria for every independent contractor she audits. If you hold to the letter of the law, which I did with my business, she will simply just close your accounts of her own volition without your authorization.
The threshold for the amount of monies that can be paid out to an independent contractor by a business is set at $30,000. As many of you can verify, one sub-contract can break that threshold thereby classifying you as an employee of the general contractor. Again, this is called divide and conquer. Sub-contractors will be afraid to bid jobs that are substantial. They will also be hesitant to make repetitive bids to the same general contractor. This will break apart many strong and functioning contractual relationships, which is the bedrock of the construction industry.
One regulation is so ludicrous it takes a man three to four times to read it through in order to believe it. It states that the sub-contractor cannot provide the same services as the general contractor. So, a homebuilder cannot hire any sub-contractors who do home building. I’m sure we would all prefer to have our house framed by a seamstress and, if she’s ever sewn curtains for a house, she out, too!
One contractor was fined, by Shelliejo Merrill, because he hired a painter who was not licensed with the State of Maine. The State of Maine does not require painters to be licensed! The only trades required to be licensed in this state are plumbers and electricians.
The sad truth is that laws have been manipulated to target the working people of America using their own tax dollars. Even in the face of a government machine and laws formed to bind us, we must not retire! We must not capitulate! It is our responsibility to stand firm and fight for matters most, that is, the future of our children. My brothers and sisters, perhaps we may not be able to enjoy the fruits of prosperity ourselves, but if we unify, if we sacrifice our comforts now, I believe, our children will reap the rewards of our efforts. I leave you with a quote from a man much greater than I. “To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.” – Thomas Jefferson