[Congressional Record Volume 142, Number 34 (Wednesday, March 13, 1996)]
[Senate]
[Pages S1970-S1977]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BOND (for himself, Mr. Nickles, Mr. Dole, Mr. D'Amato, Mr. 
        Murkowski, Mr. Inhofe, Mr. Lott, Mr. Gramm, and Mr. Frist):
  S. 1610. A bill to amend the Internal Revenue Code of 1986 to clarify 
the standards used for determining whether individuals are not 
employees; to the Committee on Finance.


       The Independent Contractor Tax Simplification Act of 1996

  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.

[[Page S1971]]

  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.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1610

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Independent Contractor Tax 
     Simplification Act of 1996''.

     SEC. 2. FINDINGS.

       The Congress finds that:
       (1) Simplifying the tax rules with respect to independent 
     contractors was the top vote-getter at the 1995 White House 
     Conference on Small Business. Conference delegates 
     recommended that Congress ``should recognize the legitimacy 
     of an independent contractor''. The Conference found that the 
     current common law is ``too subjective'' and called upon the 
     Congress to establish ``realistic and consistent 
     guidelines''.
       (2) It is in the best interests of taxpayers and the 
     Federal Government to have fair and objective rules for 
     determining who is an employee and who is an independent 
     contractor.

     SEC. 3. STANDARDS FOR DETERMINING WHETHER INDIVIDUALS ARE NOT 
                   EMPLOYEES.

       (a) In General.--Chapter 25 of the Internal Revenue Code of 
     1986 (general provisions relating to employment taxes) is 
     amended by adding after section 3510 the following new 
     section:

     ``SEC. 3511. STANDARDS FOR DETERMINING WHETHER INDIVIDUALS 
                   ARE NOT EMPLOYEES.

       ``(a) General Rule.--For purposes of this title, and 
     notwithstanding any provision of this title to the contrary, 
     if the requirements of subsections (b), (c), and (d) are met 
     with respect to any service performed by any individual, then 
     with respect to such service--
       ``(1) the service provider shall not be treated as an 
     employee,
       ``(2) the service recipient shall not be treated as an 
     employer,
       ``(3) the payor shall not be treated as an employer, and
       ``(4) compensation paid or received for such service shall 
     not be treated as paid or received with respect to 
     employment.
       ``(b) Service Provider Requirements With Regard to Service 
     Recipient.--For the purposes of subsection (a), the 
     requirements of this subsection are met if the service 
     provider, in connection with performing the service--
       ``(1) has a significant investment in assets, training, or 
     both,
       ``(2) incurs significant unreimbursed expenses,
       ``(3) agrees to perform the service for a particular amount 
     of time or to complete a specific result and is liable for 
     damages for early termination without cause,
       ``(4) is paid primarily on a commissioned basis or per unit 
     basis, or
       ``(5) purchases products for resale.
       ``(c) Additional Service Provider Requirements With Regard 
     to Others.--For the purposes of subsection (a), the 
     requirements of this subsection are met if--
       ``(1) the service provider--
       ``(A) has a principal place of business,
       ``(B) does not primarily provide the service at the service 
     recipient's facilities,
       ``(C) pays a fair market rent for use of the service 
     recipient's facilities, or
       ``(D) operates primarily from equipment not supplied by the 
     service recipient; or
       ``(2) the service provider--
       ``(A) is not required to perform service exclusively for 
     the service recipient, and
       ``(B) in the year involved, or in the preceding or 
     subsequent year--
       ``(i) has performed a significant amount of service for 
     other persons,
       ``(ii) has offered to perform service for other persons 
     through--
       ``(I) advertising,
       ``(II) individual written or oral solicitations,
       ``(III) listing with registries, agencies, brokers, and 
     other persons in the business of providing referrals to other 
     service recipients, or
       ``(IV) other similar activities, or
       ``(iii) provides service under a business name which is 
     registered with (or for which a license has been obtained 
     from) a State, a political subdivision of a State, or any 
     agency or instrumentality of 1 or more States or political 
     subdivisions.
       ``(d) Written Document Requirements.--For purposes of 
     subsection (a), the requirements of this subsection are met 
     if the services performed by the individual are performed 
     pursuant to a written contract between such individual and 
     the person for whom the services are performed, or the payor, 
     and such contract provides that the individual will not be 
     treated as an employee with respect to such services for 
     purposes of this subtitle.
       ``(e) Special Rules.--For purposes of this section--
       ``(1) Failure to meet reporting requirements.--If for any 
     taxable year any service recipient or payor fails to meet the 
     applicable reporting requirements of section 6041(a), 
     6041A(a), or 6051 with respect to a service provider, then, 
     unless such failure is due to reasonable cause and not 
     willful neglect, this section shall not apply in determining 
     whether such service provider shall not be treated as an 
     employee of such serviced recipient or payor for such year.
       ``(2) Related entities.--If the service provider is 
     performing services through an entity owned in whole or in 
     part by such service provider, then the references to 
     `service provider' in subsections (b) through (d) may include 
     such entity, provided that the written contract referred to 
     in paragraph (1) of subsection (d) may be with either the 
     service provider or such entity and need not be with both.
       ``(f) Definitions.--For the purposes of this section--
       ``(1) Service provider.--The term `service provider' means 
     any individual who performs service for another person.
       ``(2) Service recipient.--Except as provided in paragraph 
     (5), the term `service recipient' means the person for whom 
     the service provider performs such service.
       ``(3) Payor.--Except as provided in paragraph (5), the term 
     `payor' means the person who pays the service provider for 
     the performance of such service in the event that the service 
     recipients do not pay the service provider.
       ``(4) In connection with performing the service.--The term 
     `in connection with performing the service' means in 
     connection or related to--
       ``(A) the actual service performed by the service provider 
     for the service recipients or for other persons for whom the 
     service provider has performed similar service, or
       ``(B) the operation of the service provider's trade or 
     business.
       ``(5) Exceptions.--The terms `service recipient' and 
     `payor' do not include any entity which is owned in whole or 
     in part by the service provider.''
       (b) Clerical Amendment.--The table of sections for chapter 
     25 of such Code is amended by adding at the end the following 
     new item:

``Sec. 3511. Standards for determining whether individuals are not 
              employees.''

       (c) Effective Date.--The amendments made by this Act shall 
     apply to services performed before, on, or after the date of 
     the enactment of this Act.
                                                                    ____


      Summary of the Independent Contractor Tax Simplification Act

       For too long now, businesses have been forced to rely upon 
     complicated and ambiguous IRS guidelines for classifying 
     individual

[[Page S1972]]

     workers as employees or independent contractors. IRS audit 
     determinations of misclassification often result in heavy tax 
     penalties. Clarifying independent contractor rules was 
     considered the top small business priority by conference 
     delegates at the 1995 White House Conference on Small 
     Business.
       Instead of trying to define who is an employee (the common 
     law 20-point test), this legislation creates a simple 
     definition of who is not an employee.


                              General Rule

       If this legislation's requirements are met with respect to 
     any service performed by any individual, then the service 
     provider shall not be treated as an employee, the service 
     recipient shall not be treated as an employer, the payor 
     shall not be treated as an employer, and the compensation 
     paid shall not be treated as paid with respect to employment.


                        investment/training/risk

       With regard to the service being performed, the service 
     provider must--
       (1) have a significant investment in assets and/or 
     training, or
       (2) incur significant unreimbursed expenses, or
       (3) agree to perform the service for a particular amount of 
     time or to complete a specific result and is liable for 
     damages for early termination without cause, or
       (4) be paid primarily on a commissioned or per-unit basis, 
     or
       (5) purchase products for resale.


                principal place of business/advertising

       With regard to other parties, the service provider must--
       (1) have a principal place of business, or
       (2) not primarily provide the service in the recipient's 
     facilities unless the provider is paying a fair market rent 
     for this use, or
       (3) operate primarily from equipment not supplied by the 
     service recipient, or
       (4) not be required to perform service exclusively for the 
     service recipient, and
       (a) have recently performed a significant amount of service 
     for other persons, or
       (b) have offered to perform service for persons through 
     advertising, individual solicitations, listing with 
     registries, etc, or other similar activities, or
       (c) have provided service under a registered or licensed 
     business name.


                     written document requirements

       The services of a provider must be performed pursuant to a 
     written contract between such individual and the service 
     recipient stating that the provider will not be treated as an 
     employee.


                             special rules

       If any service recipient fails to meet the applicable IRS 
     reporting requirements with respect to a service provider, 
     then they may not rely upon these simplified independent 
     contractor guidelines and are subject to the existing 20-
     point common law test.
                                                                    ____

                                            National Federation of
                                             Independent Business,
                                   Washington, DC, March 12, 1996.
     Hon. Kit Bond,
     U.S. Senate,
     Washington, DC.
       Dear Senator Bond: On behalf of the more than 600,000 
     members of the National Federation of Independent Business 
     (NFIB), I am writing to offer our strong support of the 
     Independent Contractor Simplification Act. The independent 
     contractor issue has been confusing and burdensome for small 
     business owners for decades. As you know, the independent 
     contractor issue was the top recommendation of the 1995 White 
     House Conference on Small Business.
       Small businesses are put in a lose-lose situation with the 
     Internal Revenue Service. Under the current law, they are 
     required to classify individuals as independent contractors 
     or employees based on extremely vague and ambiguous IRS 
     guidelines. When a small business owner mistakenly 
     misclassifies a worker based on these vague criteria, the IRS 
     audits the business and levies back tax penalties. Even if 
     the employer fully reported all payments to the independent 
     contractor and the mistake was unintentional, these penalties 
     are still levied. This misunderstanding can put the employer 
     out of business. For small businesses, misinterpreting these 
     nebulous IRS guidelines can be financially devastating.
       The Independent Contractor Simplification Act sets forth an 
     alternate set of clear and distinct criteria for businesses 
     to follow when classifying their workers. It solves the 
     independent contractor problem by defining who is not an 
     employee. Most importantly, the legislation puts forth 
     safeguards against abusing this classification by prohibiting 
     both independent contractor and employer from relying on 
     these new rules if all payments for service are not properly 
     reported to the IRS.
       We commend you on your legislation which sends much needed 
     relief to our nation's small business owners and the million 
     of budding entrepreneurs who have an interest in being an 
     independent contractor. We look forward to working with you 
     to move the Independent Contractor Simplification Act through 
     the Senate.
           Sincerely,

                                             Donald A. Danner,

                                                   Vice President,
     Federal Governmental Relations.
                                                                    ____

                                                   The Independent


                                         Contractor Coalition,

                                                   Washington, DC.
     Hon. Kit Bond,
     U.S. Senate,
     Washington, DC.
       Dear Senator Bond: We the undersigned, representing a 
     cross-section of close to one million businesses and 
     individuals, are writing to offer our strong support for the 
     Independent Contractor Tax Simplification Act.
       This legislation will bring much needed relief to millions 
     of businesses and budding entrepreneurs in addressing 
     ambiguities in the IRS guidelines for determining independent 
     contractor status.
       At a minimum, the current system by which the IRS enforces 
     laws and regulations governing an individual's employment tax 
     status promotes uncertainty and inhibits entry of aspiring 
     entrepreneurs into the free market system as independent 
     contractors. At its worst, the current system is unfairly 
     biased against the use of independent contractors and 
     constrains economic expansion of our nation's free market 
     system.
       The Bond/Nickles bill will settle many of the problems 
     associated with the current system. By setting forth a clear 
     set of alternate criteria, this legislation will resolve many 
     of the long standing complaints businesses and individuals 
     have had with the vague and often subjective guidelines the 
     IRS uses to classify workers as employees or independent 
     contractors.
       As the leading coalition of businesses and individuals 
     working to clarify independent contractor status, we commend 
     you on your effort and look forward to working with you to 
     move this legislation through the Senate.
       Allow the free enterprise system to work for the benefit of 
     our economy.
           Sincerely,
                                                  Nelson Litterst,
                                                   NFIB, Co-Chair.
                                                     John Satagaj,
                                                   SBLC, Co-Chair.


 THE BOND/NICKLES INDEPENDENT CONTRACTOR LEGISLATION--Endorsement List

       Agricultural & Industrial Manuf. (AIMRA).
       Air Courier Conference of America.
       Alliance of Independent Store Owners & Professionals.
       American Animal Hospital Association.
       American Association of Equine Practitioners.
       American Association of Meat Processors.
       American Association for Medical Transcription.
       American Association of Nurserymen.
       American Consulting Engineers Councils.
       American Council of Independent Laboratories.
       American Rental Association.
       American Society of Interior Designers.
       Associated Builders & Contractors.
       Associated Landscape Contractors of America.
       American Society of Travel Agents.
       American Warehouse Association.
       Bureau of Wholesale Sales Representatives.
       Business Advertising Council, Inc.
       Computer Software Industry Association.
       Council of Growing Companies.
       Direct Selling Association.
       Electronics Representatives Association.
       Expedited Package Independent Contractor Council.
       FTD Association.
       Health Industry Representatives Association.
       Helicopter Association International.
       Home Food Service of Colorado.
       Independent Computer Consultants Association.
       Independent Distributors Association.
       Independent Medical Distributors Association.
       Institute of Electrical and Electronics Engineers-U.S. 
     Activities.
       International Association for Financial Planning.
       International Taxi Cab and Livery Association.
       International Television Association Inc.
       Marine Retailers Association of America.
       McNair Law Firm.
       Messenger Courier Association of the Americas.
       Metal Treating Institute.
       National Association of Computer Consultant Businesses.
       National Association of Orchestra Leaders.
       National Association of the Remodeling Industry.
       National Association for the Self-Employed.
       National Electrical Manufacturers Representative 
     Association.
       National Federation of Independent Business.
       National Fire Sprinkler Association.
       National Home Furnishings Association.
       National Moving & Storage Association.
       National Restaurant Association.
       National Tooling & Machining Association.
       National Tour Association.
       Nurse Brokers and Contractors of America.
       Power-Motion Technology Representative Association.
       Promotional Products Association International.
       Rich Plan Corporation.
       Securities Industry Association.
       Small Business Legislative Council.
       SMC Business Councils.
       Society of American Florists.
       The Management Association of Illinois.
       World Floor Covering Association.
                                                                    ____


[[Page S1973]]

                           Small Business Legislative Council,

                                    Washington, DC, March 4, 1996.
     Hon. Christopher Bond,
     Hon. Don Nickles,
     U.S. Senate,
     Washington, DC.
       Dear Senators Bond and Nickles: On behalf of the Small 
     Business Legislative Council (SBLC), I wish to express our 
     strong support for your legislation to establish clear and 
     objective rules for the purposes of determining whether an 
     individual is an independent contractor or employee.
       This is a long-time concern of the SBLC. Indeed, one of the 
     founding principles of the organization, when it was 
     established in the mid-1970s, was to work to encourage 
     individuals to pursue the American Dream--owning and managing 
     their own business. Becoming an independent contractor is 
     both the means and the end to that goal.
       As you know, the delegates to the 1995 White House 
     Conference on Small Business made this one of their priority 
     recommendations. Indeed, while there was no official ranking, 
     this was the top vote-getter in the final balloting.
       Congratulations on this initiative! We look forward to 
     working with you towards the passage and enactment.
       The Small Business Legislative Council (SBLC) is a 
     permanent, independent coalition of nearly one hundred trade 
     and professional associations that share a common commitment 
     to the future of small business. Our members represent the 
     interests of small businesses in such diverse economic 
     sectors as manufacturing, retailing, distribution, 
     professional and technical services, construction, 
     transportation and agriculture. Our policies are developed 
     through a consensus among our membership. Individual 
     associations may express their own views. For your 
     information, a list of our members is enclosed.
           Sincerely,
                                                    Gary F. Petty,
     Chairman of the Board.
                                                                    ____



           members of the small business legislative council

       Air Conditioning Contractors of America.
       Alliance for Affordable Health Care.
       Alliance for American Innovation.
       Alliance of Independent Store Owners and Professionals.
       American Animal Hospital Association.
       American Association of Equine Practitioners.
       American Association of Nurserymen.
       American Bus Association.
       American Consulting Engineers Council.
       American Council of Independent Laboratories.
       American Gear Manufacturers Association.
       American Machine Tool Distributors Association.
       American Road & Transportation Builders Association.
       American Society of Interior Designers.
       American Society of Travel Agents, Inc.
       American Subcontractors Association.
       American Textile Machinery Association.
       American Trucking Associations, Inc.
       American Warehouse Association.
       AMT-The Association for Manufacturing Technology.
       Architectural Precast Association.
       Associated Builders & Contractors.
       Associated Equipment Distributors.
       Associated Landscape Contractors of America.
       Association of Small Business Development Centers.
       Automotive Service Association.
       Automotive Recyclers Association.
       Bowling Proprietors Association of America.
       Building Service Contractors Association International.
       Business Advertising Council.
       Christian Booksellers Association.
       Council of Fleet Specialists.
       Council of Growing Companies.
       Direct Selling Association.
       Electronics Representatives Association.
       Florists' Transworld Delivery Association.
       Health Industry Representatives Association.
       Helicopter Association International.
       Independent Bankers Association of America.
       Independent Medical Distributors Association.
       International Association of Refrigerated Warehouses.
       International Communications Industries Association.
       International Formalwear Association.
       International Franchise Association.
       International Television Association.
       Machinery Dealers National Association.
       Mail Advertising Service Association.
       Manufacturers Agents National Association.
       Manufacturers Representatives of America, Inc.
       Mechanical Contractors Association of America, Inc.
       National Association for the Self-Employed.
       National Association of Catalog Showroom Merchandisers.
       National Association of Home Builders.
       National Association of Investment Companies.
       National Association of Plumbing-Heating-Cooling 
     Contractors.
       National Association of Private Enterprise.
       National Association of Realtors.
       National Association of RV Parks and Campgrounds.
       National Association of Small Business Investment 
     Companies.
       National Association of the Remodeling Industry.
       National Chimney Sweep Guild.
       National Electrical Contractors Association.
       National Electrical Manufacturers Representatives 
     Association.
       National Food Brokers Association.
       National Independent Flag Dealers Association.
       National Knitwear & Sportswear Association.
       National Lumber & Building Material Dealers Association.
       National Moving and Storage Association.
       National Ornamental & Miscellaneous Metals Association.
       National Paperbox Association.
       National Shoe Retailers Association.
       National Society of Public Accountants.
       National Tire Dealers & Retreaders Association.
       National Tooling and Machining Association.
       National Tour Association.
       National Wood Flooring Association.
       NATSO, Inc.
       Opticians Association of America.
       Organization for the Protection and Advancement of Small 
     Telephone Companies.
       Petroleum Marketers Association of America.
       Power Transmission Representatives Association.
       Printing Industries of America, Inc.
       Professional Lawn Care Association of America.
       Promotional Products Association International.
       The Retailer's Bakery Association.
       Small Business Council of America, Inc.
       Small Business Exporters Association.
       SMC Business Councils.
       Society of American Florists.
       Turfgrass Producers International.
                                                                    ____

                                                     National Home


                                      Furnishings Association,

                                    Washington, DC, March 4, 1996.
     Hon. Christopher Bond,
     Hon. Don Nickles,
     U.S. Senate,
     Washington, DC.
       Dear Senators Bond and Nickles: On behalf of the National 
     Home Furnishings Association (NHFA), I would like to offer 
     our endorsement of your bill to establish criteria for the 
     determination of individuals as independent contractors or 
     employees for federal employment tax purposes.
       Our retailers engage independent contractors to provide a 
     variety of services including design, installation, and 
     delivery. This has been a long-standing practice in our 
     industry.
       The unsettled nature of the law in this area has been the 
     cause for concern in our industry and, therefore, we support 
     your efforts.
       The NHFA represents approximately 2,800 retailers of home 
     furnishings throughout the United States.
       We look forward to working with you towards passage of this 
     important legislation.
           Sincerely,
                                                 Patricia Bowling,
     Executive Vice President.
                                                                    ____



                             World Floor Covering Association,

                                    Washington, DC, March 4, 1996.
     Hon. Christopher Bond,
     Hon. Don Nickles,
     U.S. Senate,
     Washington, DC.
       Dear Senators Bond and Nickles: On behalf of the World 
     Floor Covering Association (WFCA), and our member 
     floorcovering retailers, I would like to express our strong 
     support for your bill to establish realistic criteria for the 
     classification of individuals as independent contractors or 
     employees for federal employment tax purposes.
       Our retailers engage independent contractors to provide 
     installation services. This has been a long-standing practice 
     in our industry and is fundamental to the way we do and have 
     done business for many years.
       Over the years, we and our members have discussed this 
     matter with the IRS on numerous occasions. The only thing we 
     can say about the discussions is it is apparent to us that 
     Congress must step in and establish a clear and objective set 
     of rules. That is why we support your bill. We also believe 
     Congress should establish once and for all, that encouraging 
     individuals to become independent contractors is a good thing 
     for the nation and the economy.
       We look forward to working with you towards passage of this 
     important legislation.
           Sincerely,
                                             D. Christopher Davis,
     Chief Executive Officer.
                                                                    ____

                                              Promotional Products


                                    Association International,

                                        Irving, TX, March 4, 1996.
     Hon. Christopher Bond,
     Hon. Don Nickles,
     U.S. Senate,
     Washington, DC.
       Dear Senators Bond and Nickles: On behalf of the 
     Promotional Product Association International (PPA), I would 
     like to offer our support for your bill to establish rules 
     for the classification of individuals as independent 
     contractors or employees.
       Historically, our industry has engaged independent 
     contractors to sell its products

[[Page S1974]]

     and services. We feel our industry practice is the epitome of 
     the American tradition of selling products and services 
     through independent sales representatives.
       We strongly believe clear and objective rules that will put 
     the ongoing battle between the IRS and small business over 
     this issue behind us are needed and welcomed. Therefore, we 
     support your efforts.
       The promotional products industry is the advertising, sales 
     promotion, and motivational medium employing useful articles 
     of merchandise imprinted with an advertiser's name, logo, or 
     message. Our industry sales are over $6 billion and PPA 
     members are manufacturers and distributors of such goods and 
     services.
       We look forward to working with you towards passage of this 
     important legislation.
           Sincerely,
                                                G. Stephen Slagle,
                                                        President.

  Mr. NICKLES. Mr. President, one of the most fundamental concepts in 
our free enterprise economy is the ability of any American to use 
talent, intelligence, and hard work to start a business. The small, 
independent business is the engine which drives innovation, job 
creation, and increased economic activity in this country.
  For many small, start-up companies, independent contractor status is 
the best way, and sometimes the only way, they can do business. 
Similarly, many larger, established businesses find that using 
independent contractors is the most effective way of handling projects 
that require special talents. There are five million independent 
contractors in America according to the Small Business Administration, 
and almost one-third of all companies use independent contractors to 
some degree. Independent contractor status gives both the service 
provider and the service recipient the flexibility needed to be 
competitive in today's economic environment.
  Before coming to the U.S. Senate, I had first hand experience with 
these issues; both working as and employing independent contractors. 
The janitorial service I began as a student at Oklahoma State 
University could not have existed if I had been required to work as an 
employee, and it never would have expanded if I could not have hired 
other students as independent contractors to handle specific jobs.
  Despite the obvious importance of independent contractors to our 
economy, Congress has amazingly failed to give workers or businesses 
adequate guidance as to who is an employee and who is an independent 
contractor. Unfortunately, this lack of decisive congressional action 
combined with aggressive dislike of independent contractors by the 
Internal Revenue Service has subjected many businesses to abusive 
audits and unfair penalties. In effect, our Government is killing the 
independent contractor.
  Mr. President, I rise today with my colleague from Missouri, Senator 
Bond, to introduce the Independent Contractor Tax Simplification Act. 
This legislation is the Senate companion of a H.R. 1972, a bill 
introduced last year by Congressman Jon Christensen which now has 215 
cosponsors. Our bill, which is supported by over 50 trade and industry 
associations, cuts through the horrendously complicated and ambiguous 
current law rules and provides relief and confidence to independent 
contractors and service recipients alike.
  Why is congressional action needed, Mr. President? In the mid-1970's, 
the IRS undertook a major initiative to reclassify workers as 
employees. In response to the tremendous outcry from business owners, 
Congress in 1978 enacted what was intended to be a temporary solution, 
the section 530 safe harbor provisions. Section 530 prohibited the IRS 
from reclassifying workers as employees if the employer had a 
reasonable basis for treatment of the workers as independent 
contractors, or if a past IRS audit did not dispute the workers' 
classification.
  So for two decades, independent contractor status has been controlled 
by this temporary solution, related IRS rulings, judicial precedent, 
and legislation targeted at specific industries. Those contractors and 
businesses who are unable to rely upon section 530 are subjected to a 
20-point command law test which attempts to define an employer's 
control over workers. This common law test is the bane of employers and 
workers across the country, and is at the heart of the problems my 
legislation intends to address. The General Accounting Office calls the 
common law test ``unclear and subject to conflicting interpretations''. 
Even the Treasury Department has testified that ``applying the common 
law test in employment tax issues does not yield clear, consistent, or 
even satisfactory answers, and reasonable persons may differ as to the 
correct classification''.
  The horror stories surrounding this issue are numerous and 
disturbing, Mr. President. Last year, ``NBC Nightly News'' ran a story 
on two business owners who are facing hundreds of thousands of dollars 
in back taxes and penalties because the IRS decided to reclassify their 
independent contractors as employees. One of these citizens, who owns a 
travel agency, received a bill for almost $200,000 in back taxes, 
penalties, and interest, despite the fact that his independent 
contractors had already paid their taxes! Mr. President, a $200,000 tax 
bill will close the doors of most small businesses.
  According to the NBC report, the IRS has used these worker 
classification audits to collect more than three-quarters of a billion 
dollars from business owners over the last 7 years in disputed 
employment taxes, even though many of the independent contractors had 
already paid these taxes.
  The Independent Contractor Tax Simplification Act replaces the 
complicated and arbitrary common law test with a simple definition of 
who is not an employee.
  To qualify for independent contractor status, my legislation requires 
the service provider to have a significant investment in assets and/or 
training, or incur significant unreimbursed expenses, or agree to 
perform the service for a particular amount of time or to, complete a 
specific result and is liable for damages for early termination without 
cause, or be paid primarily on a commissioned or per-unit basis, or 
purchase products for resale.
  Further, under my legislation the service provider must have a 
principal place of business, or not primarily provide the service in 
the recipient's facilities unless the provider is paying a fair market 
rent for their use, or operate primarily from equipment not supplied by 
the service recipient or not be required to perform service exclusively 
for the service recipient, and have recently performed a significant 
amount of service for other persons, or have offered to perform service 
for other persons through advertising, individual solicitations, 
listing with registries, et cetera or other similar activities, or have 
provided service under a registered or licensed business name.
  Finally, Mr. President, my legislation requires businesses and 
independent contractors to enter into a written contract and comply 
with all applicable IRS reporting requirements to ensure that payments 
to independent contractors are properly reported in order to prevent 
taxpayer arbitrage.
  I would like to stress, Mr. President, that this legislation is not a 
comprehensive rewrite of all independent contractor law. It is very 
difficult to address all worker classification issues in one bill, 
because there is an unlimited number of employment situations and each 
one presents different challenges. Further, many individuals, 
businesses, and trade associations have resolved their problems with 
the IRS, and they fear that a comprehensive change in the law will 
force them to renew old arguments with the Government or impose 
unwanted conditions on their employment practices, such as tax 
withholding. The Independent Contractor Tax Simplification Act will 
benefit those businesses and contractors who have not resolved their 
status with the IRS, while preserving current law for those who are 
satisfied with it.
  Mr. President, it is not fair to business, nor is it conducive to the 
entrepreneurial spirit of this country, to leave the question of worker 
classification up to the whim of the IRS. The importance and timeliness 
of this issue was made clear last summer when delegates to the White 
House Conference on Small Business made clarifying independent 
contractor rules their No. 1 small business priority. I believe 
Congress should act decisively to recognize the importance of 
independent contractors, and I invite my colleagues to join me in this 
initiative.
                                 ______

      By Mr. McCONNELL:
  S. 1611. A bill to establish the Kentucky National Wildlife Refuge, 
and for other purposes; to the Committee on Environment and Public 
Works.

[[Page S1975]]

        the kentucky national wildlife refuge authorization act

 Mr. McCONNELL. Mr. President, I introduce a bill to establish 
the Kentucky National Wildlife Refuge. The designation will give 
Kentucky something that 49 other States have enjoyed for a long time: 
its own national wildlife refuge. What this means to my State is new 
tourism opportunities and a pristine environmental preserve that will 
be part of our legacy to future generations.
  Nearly 100 years ago, President Theodore Roosevelt established the 
National Wildlife Refuge System to protect our Nation's open lands, 
water, and wildlife for the future. It was one of the first Federal 
environmental programs in our history.
  Today, the National Wildlife Refuge System is made up of 571 refuges 
in 49 States and U.S. Territories, totaling nearly 92 million acres of 
the Nation's best wildlife habitat. Until now, Kentucky has been the 
only State without its own independently managed refuge.
  The legislation I am proposing will authorize the U.S. Fish and 
Wildlife Service to purchase up to 20,000 acres in western Kentucky 
located in the east fork of the Clarks River. This site, located near 
Benton, is the only major bottomland hardwood area remaining in western 
Kentucky.
  Once established, the Kentucky National Wildlife Refuge will showcase 
a unique ecosystem, protecting wildlife and offering a variety of 
educational opportunities for the public. This refuge will also provide 
recreational activities, including bird-watching, hiking, hunting, and 
the fishing.
  The refuge area is situated on an important migratory fly-way and 
breeding area for a variety of waterfowl. A large number of migratory 
birds including wood ducks, song birds, and the threatened bald eagle 
make their home here. The hardwood forests make an ideal habitat for 
numerous woodpeckers, hawks, and the eastern wild turkey. Other 
wildlife which would thrive in this area include deer, beavers, otters, 
and bobcats.
  For visitors, the refuge is conveniently located near Paducah, 
Mayfield, Murray, and Benton, and is just 15 miles from Land Between 
the Lakes, which draws nearly 2 million visitors a year. This refuge is 
ideally suited to serve surrounding schools, recreational hikers, and 
hunters. The Clarks River will also appeal to those who enjoy canoeing 
and fishing as well.
  In addition to the environmental and educational benefits, the 
designation of the Kentucky Wildlife Refuge will also provide a 
significant economic boost to the area. The creation of Kentucky's 
first refuge will help keep tourist dollars in the State. A perfect 
example of this is a trip, planned by the Louisville Zoo, to a National 
Wildlife Refuge in Tennessee. This trip is for Kentuckians who are 
interested in eagle-watching. By creating a Kentucky wildlife refuge, 
people who are interested in outdoor activities would have an 
opportunity here in Kentucky--something that nature lovers and the 
State would benefit from.
  I have worked hard to ensure that my proposal is fair in protecting 
the rights of individual landowners, while preserving this important 
habitat. Contained in my bill is language to ensure that the 
acquisition of refuge lands will be from willing sellers, donations, or 
exchanges only.
  I am sensitive to the property rights and concerns of local 
landowners; and for this reason I will closely follow the project to 
ensure that their rights are protected.
  I have also worked closely with the Kentucky Farm Bureau to guarantee 
that the management of the refuge will not impact surrounding farmers 
or unduly restrict agricultural activities. I am confident that both 
agricultural interests and conservation interests can exist side-by-
side in this region.
  Finally, it is deeply gratifying to have such a broad array of 
support for my proposal, including State and local public officials, 
conservation groups, and sportsmen. I would like to commend Tom 
Bennett, commissioner of the Kentucky Department of Fish and Wildlife 
Resources, and his staff, for their efforts to establish consensus 
among the various groups. This refuge could never have been established 
without the strong support of people like Tom, as well as the 
cooperation we have received from the surrounding communities.
  It has been 92 years since Teddy Roosevelt created the National 
Wildlife Refuge System. The time is long overdue for Kentucky to join 
that system at last.
   Mr. President, I ask unanimous consent that a text of the bill be 
printed in the Record and a list of organizations and individuals who 
have endorsed the creation of the wildlife refuge also be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1611

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Kentucky National Wildlife 
     Refuge Authorization Act''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the area known as the Clarks River Basin, consisting of 
     20,000 acres of bottomland hardwood and associated wetlands 
     along the Clarks River and the East Fork of the Clarks River 
     in Graves, Marshall, and McCracken Counties, Kentucky, is of 
     critical importance to a variety of migratory and resident 
     waterfowl, neotropical migratory birds, forest wildlife, and 
     riverine species, and a wide array of other species 
     associated with bottomland communities;
       (2) the area is the only major, natural (unchannelized) 
     bottomland hardwood wetland ecosystem remaining in western 
     Kentucky and attracts wintering migratory waterfowl, 
     neotropical migratory birds, and an array of raptors;
       (3) the area provides extraordinary recreational, research, 
     and educational opportunities for students, scientists, 
     birdwatchers, wildlife observers, hunters, anglers, hikers, 
     and nature photographers;
       (4) the area is an internationally significant 
     environmental resource that is unprotected and requires 
     active management to prevent vegetative encroachment and to 
     otherwise protect and enhance the value of the area as fish 
     and wildlife habitat;
       (5) the Clarks River Basin has been identified in the 
     preliminary project proposal plan for the establishment of 
     the Kentucky National Wildlife Refuge, prepared by the United 
     States Fish and Wildlife Service (Southeast Region), as an 
     area deserving permanent protection; and
       (6) since agriculture and silviculture are essential to the 
     economies of Graves, Marshall, and McCracken Counties and can 
     contribute to healthy ecosystems for wildlife, the refuge 
     should not restrict agricultural and silvicultural activities 
     on private lands.

     SEC. 3. PURPOSE.

       The purpose of this Act is to establish the Kentucky 
     National Wildlife Refuge to be managed--
       (1) to conserve fish and wildlife populations and the 
     habitats of the populations, including habitats of bald 
     eagles, golden eagles, Indiana bats, wood ducks, neotropical 
     migratory birds, shorebirds, and other migratory birds;
       (2) to preserve and showcase the concepts of biodiversity 
     and ecosystem management;
       (3) to enhance and provide a vital link to public areas 
     containing habitat managed for waterfowl and other migratory 
     birds;
       (4) to fulfill international treaty obligations of the 
     United States with regard to fish and wildlife and the 
     habitats of the fish and wildlife;
       (5) to restore and maintain the physical and biological 
     integrity of wetlands and other waters within the refuge;
       (6) to conserve species known to be threatened with 
     extinction; and
       (7) to provide opportunities for scientific research, 
     environmental education, and fish- and wildlife-associated 
     recreation (including hunting, trapping, and fishing) and 
     access to the extent compatible with the management purposes 
     specified in paragraphs (1) through (6).

     SEC. 4. DEFINITIONS.

       In this Act:
       (1) Land.--The term ``land'' includes an interest in land.
       (2) Refuge.--The term ``refuge'' means the Kentucky 
     National Wildlife Refuge established under section 5.
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior, acting through the Director of the United 
     States Fish and Wildlife Service.
       (4) Water.--The term ``water'' includes an interest in 
     water.

     SEC. 5. ESTABLISHMENT OF REFUGE.

       (a) Establishment.--In accordance with this Act, the 
     Secretary shall establish a staffed and fully functional 
     national wildlife refuge to be known as the ``Kentucky 
     National Wildlife Refuge''.
       (b) Boundary Designation.--The Secretary shall--
       (1) consult with appropriate State and local officials, 
     private conservation organizations, and other interested 
     parties in designating the boundaries of the refuge, which 
     shall comprise approximately 20,000 acres;
       (2) prepare a detailed map depicting the boundaries 
     designated under paragraph (1), which shall be on file and 
     available for public inspection at offices of the United 
     States Fish and Wildlife Service; and
       (3) include in the boundaries of the refuge the lands, 
     aquatic systems, wetlands, and

[[Page S1976]]

     waters depicted on the maps prepared under paragraph (2).
       (c) Boundary Revisions.--The Secretary may make such minor 
     revisions in the boundaries designated under subsection (b) 
     as are necessary to carry out the purpose of the refuge and 
     to facilitate the acquisition of property within the refuge.
       (d) Acquisition.--To the extent authorized under the Land 
     and Water Conservation Fund Act of 1965 (16 U.S.C. 460l-4 et 
     seq.), the Migratory Bird Conservation Act (16 U.S.C. 715 et 
     seq.), the Fish and Wildlife Act of 1956 (16 U.S.C. 742a et 
     seq.), the Emergency Wetlands Resources Act of 1986 (16 
     U.S.C. 3901 et seq.), and other laws, the Secretary may 
     acquire for inclusion in the refuge, by purchase from willing 
     sellers, donation, or exchange, lands and waters (including 
     permanent conservation easements) within the boundaries 
     designated under subsection (b). All lands and waters so 
     acquired shall become part of the refuge.
       (e) Operation and Maintenance.--The Secretary shall 
     construct such office, maintenance, and support facilities as 
     are necessary for the operation and maintenance of the 
     refuge.

     SEC. 6. ADMINISTRATION.

       (a) General Administrative Authority.--The Secretary shall 
     administer all lands and waters acquired under section 5 in 
     accordance with the National Wildlife Refuge System 
     Administration Act of 1966 (16 U.S.C. 668dd et seq.).
       (b) Other Administrative Authority.--Consistent with 
     subsection (a) and to carry out the purpose of the refuge, 
     the Secretary may use such additional authority as is 
     available to the Secretary for the conservation and 
     development of fish, wildlife, and natural resources, the 
     development of outdoor recreational opportunities (including 
     hunting, trapping, and fishing), and interpretative 
     education.
       (c) Management Plan.--
       (1) In general.--Not later than 18 months after the date of 
     enactment of this Act, the Secretary shall prepare a 
     comprehensive management plan for the development and 
     operation of the refuge that shall include--
       (A) refuge management priorities and strategies;
       (B) the planning and design of observation points, trails, 
     and access points, including parking and other necessary 
     facilities; and
       (C) such provisions as are necessary to ensure that--
       (i) no activity carried out in the refuge will result in 
     the obstruction of the flow of water so as to affect any 
     private land adjacent to the refuge; and
       (ii) no buffer zone regulating any land use (other than 
     hunting and fishing) is established.
       (2) Public participation.--
       (A) In general.--The Secretary shall provide opportunity 
     for public participation in developing the management plan.
       (B) Local entities.--The Secretary shall give special 
     consideration to means by which the participation and 
     contributions of local public and private entities in 
     developing and implementing the management plan can be 
     encouraged.
       (d) Outreach and Education.--The Secretary shall work with, 
     provide technical assistance to, provide community outreach 
     and education programs for or with, or enter into cooperative 
     agreements with private landowners, State and local 
     governments or agencies, and conservation organizations to 
     further the purpose for which the refuge is established.

     SEC. 7. GIFTS.

       As soon as practicable after the date of enactment of this 
     Act, the Director of the United States Fish and Wildlife 
     Service shall request that the National Fish and Wildlife 
     Foundation established under the National Fish and Wildlife 
     Foundation Establishment Act (16 U.S.C. 3701 et seq.) take 
     such measures as the Foundation considers appropriate to 
     encourage, accept, and administer private gifts of property 
     or funds to further the purpose of this Act.

     SEC. 8. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as are 
     necessary to carry out this Act.
                                                                    ____


Organizations That Have Endorsed the Creation of the Kentucky National 
                            Wildlife Refuge

       Appalachia Science in the Public Interest.
       Association of Chenoweth Run Environmentalists.
       Audubon Society of Kentucky.
       Bell County Beautification Association.
       Berea College Biology Club.
       Brushy Fork Water Watch.
       Community Farm Alliance.
       Daviess County Audubon Society & Kentucky Ornithological 
     Society.
       Department of Parks
       Eastern KY University Wildlife Society.
       Elkhorn Land & Historic Trust Inc.
       Floyds Fork Environmental Association.
       Friends of Mill Creek.
       Gun Powder Creek Water Watch.
       Harlan County Clean Community Association.
       Hart County Environmental Group.
       Highlands Group Cumberland Chapter Sierra Club.
       Ky Academy of Science.
       Ky Association for Environmental Education.
       Ky Audubon Council.
       Ky Citizens Accountability Project.
       Ky Conservation Committee.
       Ky Fish & Wildlife Education & Resource Foundation.
       Ky Houndsmen Association.
       Ky Native Plant Society.
       Ky Society of Natural History.
       Ky State Nature Preserve Commission.
       Lake Cumberland Water Watch.
       Land & Nature Trust of the Bluegrass.
       League of Ky Sportsman.
       League of Women Voters of Kentucky.
       Leslie County KAB System.
       Litter River Audubon Society.
       Louisville Audubon Society.
       Louisville Chapter 476 of Trout Unlimited.
       Louisville Nature Center.
       Madison County Clean Community Committee.
       Madison Environment.
       Mall Interiors.
       Midway Area Environmental Committee.
       National Wild Turkey Federation.
       Oldham Community Center & Nature Preserve, Inc.
       Petersen's Fault Farm.
       Pleasant Hill Recreation Association.
       Pride Inc.
       Quail Unlimited
       Rockcastle River Rebirth.
       Rocky Mountain Elk Foundation.
       Ruddles Mill Conservation Project.
       Scenic Kentucky.
       Shelby Clean Community Program.
       Shelby County Clean Community Council.
       Sierra Club Cumberland Chapter.
       Steve & Janet Kistler.
       The Nature Conservancy/Kentucky Chapter.
       The Wildlife Connection.
       Trout Unlimited/KYOUA Chapter.
       Mikeal E. Joseph.
       Paul Garland.
       Paul C. Garland.
       Kathy Zajac.
       William S. Bryant.
       Frances Williams.
       The Black Family.
                                 ______

      By Mr. HELMS (for himself, Mr. Dole, Mr. Hatch, Mr. Thurmond, Mr. 
        Faircloth, Mr. Gramm, and Mrs. Feinstein):
  S. 1612. A bill to provide for increased mandatory minimum sentences 
for criminals possessing firearms, and for other purposes; to the 
Committee on the Judiciary.


                mandatory minimum sentencing legislation

  Mr. HELMS. Mr. President, a drug trafficker who in 1992 was convicted 
in the U.S. District Court for the Eastern District of North Carolina 
was released from prison 2 days ago, Monday, March 11, as the tragic 
result of an unfortunate and unwise Supreme Court decision.
  Although the drug trafficker had 5 more years to serve, the U.S. 
Supreme Court, using the flimsiest of reasoning, set this convicted 
drug trafficker free. So, Mr. President, the bill I am introducing 
today will prevent future criminals from being set free. I am advised 
that my bill is being numbered S. 1612.
  Mr. President, S. 1612 provides that a 10-year minimum mandatory 
sentence shall be imposed upon any criminal possessing a gun during and 
in relation to the commission of a violent or drug trafficking crime. 
This, of course, does not apply to lawful possession of a gun.
  This bill will obviously crack down on gun-toting thugs who commit 
violent felonies and drug trafficking offenses and other felonies. 
Moreover, it will ensure that criminals possessing a firearm while 
committing a violent or drug trafficking felony shall receive a stiff 
punishment.
  This is just common sense, Mr. President; violent felons who possess 
firearms are more dangerous than those who do not.
  Current Federal law provides that a person who, during a Federal 
crime of violence or drug trafficking crime, uses or carries a firearm 
shall be sentenced to 5 years in prison. That law has been used 
effectively by Federal prosecutors across the country to add 5 
additional years to the prison sentences of criminals who use or carry 
firearms.
  However, a recent U.S. Supreme Court decision threatens to undermine 
the efforts of prosecutors to use this statute effectively. The Supreme 
Court's decision, Bailey versus United States, interpreted the law to 
require that a violent felon actively employ a firearm as a 
precondition of receiving an additional 5 year sentence. The Court in 
Bailey held that the firearm must be brandished, fired or otherwise 
actively used before the additional 5 year sentence may be imposed. So 
if a criminal merely possesses a firearm, but does not fire or 
otherwise use it, he gets off without the additional 5 year penalty.
  Mr. President, this Supreme Court decision poses serious problems for 
law enforcement. It weakens the Federal

[[Page S1977]]

criminal law; it is leading to the early release of hundreds of violent 
criminals. Before this Supreme Court's error of judgment, in the Bailey 
versus U.S. decision, armed criminals committing violent or drug 
trafficking felonies were jailed for an additional 5 years, regardless 
of whether they actively employed their weapons. Now, as a result of 
the Court's decision, the prison revolving door is in full swing. Yet 
another roadblock has been erected between a savage criminal act and 
swift, certain punishment.
  Mr. President, now that the word is out, prisoners already are 
preparing and filing motions to get out of jail as fast as they can 
write. U.S. attorneys are receiving petitions from criminals every 
day--for example consider the case of Lancelot Martin, who ran a drug 
trafficking operation out of Raleigh, NC: In 1992, Martin had attempted 
to use the U.S. Postal Service to receive and sell drugs. Martin was 
arrested by a Raleigh crime task force. The authorities obtained a 
warrant, searched his apartment, seized his drugs and recovered a 9 mm. 
semi-automatic pistol that Martin used to protect his drug business.
  Martin was convicted of drug trafficking charges and received a 5 
year sentence for using the gun. But Monday, well before his sentence 
expired, Martin walked free, simply because his gun and a hefty supply 
of drugs were found--but the Court somehow held that the gun was not 
actively employed during his drug trafficking crime.
  So, Mr. President, my bill will ensure that future criminals 
possessing guns, like Lancelot Martin, serve real time when they use a 
gun in furtherance of a violent or drug trafficking crime. There are 
many other examples similar to the episode involving Lancelot Martin.
  As a result of the Court's decision, any thug who hides a gun under 
the back seat of his car, or who stashes a gun with his drugs, may now 
get off with a slap on the wrist. Or if a criminal stores a sub-
machinegun in a crack-house where he runs a drug trafficking operation, 
he can now avoid the additional penalty. The fact is, Mr. President, 
that firearms are the tools of the trade of most drug traffickers. 
Weapons clearly facilitate the criminal transactions and embolden 
violent thugs to commit their crimes.
  I believe that mere possession of a firearm, during the commission of 
a violent felony--even if the weapon is not actively used--should 
nonetheless be punished--because of the heightened risk of violence 
when firearms are present. In its opinion, the Supreme Court observed, 
``Had Congress intended possession alone to trigger liability . . . it 
easily could have so provided.'' That, Mr. President, is precisely the 
intent of this legislation--to make clear that ``possession alone'' 
does indeed ``trigger liability.''
  This legislation will increase the mandatory--repeat, mandatory--
sentences for violent armed felons from 5 to 10 years--and if the 
firearm is discharged, the term of imprisonment is 20 years. This 
legislation also increases to 25 years the mandatory sentences for 
second and subsequent offenses.
   Mr. President, this bill is a necessary and appropriate response to 
the Supreme Court's judicial limitation of the mandatory penalty for 
gun-toting criminals. According to Sentencing Commission statistics, 
more than 9,000 armed violent felons were convicted from April, 1991, 
through October, 1995. In North Carolina alone, this statute was used 
to help imprison over 800 violent criminals. We must strengthen law 
enforcement's ability to use this strong anticrime provision.
  Fighting crime is, and should be, a top concern in America. It has 
been estimated that in the United States one violent crime is committed 
every 16 seconds. And with youth-related violent crime at an all-time 
high, we must fight back with the most severe punishment possible for 
those who terrorize law-abiding citizens.
   Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1612

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled, 

     SECTION 1. INCREASED MANDATORY MINIMUM SENTENCES FOR 
                   CRIMINALS POSSESSING FIREARMS.

       Section 924(c)(1) of title 18, United States Code, is 
     amended to read as follows:
       ``(c)(1)(A) Except to the extent a greater minimum sentence 
     is otherwise provided by any other provision of this 
     subsection or any other law, a person who, during and in 
     relation to any crime of violence or drug trafficking crime 
     (including a crime of violence or drug trafficking crime 
     which provides for an enhanced punishment if committed by the 
     use of a deadly or dangerous weapon or device) for which a 
     person may be prosecuted in a court of the United States, 
     possesses a firearm shall, in addition to the punishment 
     provided for such crime of violence or drug trafficking 
     crime--
       ``(i) be punished by imprisonment for not less than 10 
     years;
       ``(ii) if the firearm is discharged, be punished by 
     imprisonment for not less than 20 years; and
       ``(iii) if the death of a person results, be punished by 
     the death penalty or by imprisonment for not less than life.
       ``(B) If the firearm possessed by a person convicted under 
     this subsection is a machinegun or a destructive device, or 
     is equipped with a firearm silencer or firearm muffler, such 
     person shall be sentenced to imprisonment for not less than 
     30 years.
       ``(C) In the case of a second or subsequent conviction 
     under this subsection, such person shall be sentenced to 
     imprisonment for not less than 25 years, and if the firearm 
     is a machinegun or a destructive device, or is equipped with 
     a firearm silencer or firearm muffler, to life imprisonment 
     without release.
       ``(D) Notwithstanding any other provision of law, the court 
     shall not place on probation or suspend the sentence of any 
     person convicted of a violation of this subsection, nor shall 
     the term of imprisonment imposed under this subsection run 
     concurrently with any other term of imprisonment including 
     that imposed for the crime of violence or drug trafficking 
     crime in which the firearm was possessed.''.

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