By Robin Lawson

If there's one thing you should find time to do this week, it's to make your voice heard regarding a new bill about to be filed in the U.S. Senate. Sen. Christopher Bond (R-Missouri), who heads the Senate Committee on Small Business, plans to introduce the Home-Based Business Fairness Act of 1997, which addresses three issues dear to the hearts of office-at-home businesses: the IRS definition of the independent contractor, health care and home office tax deductions. Also a member of the committee is Mass. Sen. John Kerry, whom you can contact at 617-565-8519 or 202-224-2742; fax 202-224-8525; or e-mail john-kerry@kerry.senate.gov. At the 1995 White House Small Business Conference, the IRS classification of an independent contractor topped the list of obstacles faced by home-based businesses.

Currently, the IRS uses a 20-factor test to determine worker status - a test Bond characterizes as "extremely complex and highly subjective." Between 1988 and 1994, IRS use of the 20-factor test has resulted in 11,000 audits, 483,000 worker reclassifications and $ 751 million in back taxes and penalties. According to Bond, this is "an indication that the IRS may be using this test as a convenient source of enhanced revenue collection. Convenient for the IRS, disastrous for the entrepreneur."

With the intent of simplifying and clarifying the issue, Bond last year introduced the Independent Contractor Tax Simplification Act which replaced the 20-factor test with three questions. The bill never left the Finance Committee.

The new bill to be introduced this week includes a similar provision, and wraps in the two other issues in a single piece of legislation - which may give it more weight. Regarding health insurance, the bill proposes that small businesses be allowed to deduct 100 percent of their premiums. While the Health Insurance Portability and Accountability Act signed into law last year increases the amount of deductible health care costs 40 percent this year, gradually increasing to 80 percent by 2006, Bond believes this doesn't go far enough. "It is totally unfair that large corporations can deduct 100 percent of their share of employees' health care costs, while the self-employed farmer, child-care provider or truck driver can only deduct 40 percent."

The result: 25 percent of self-employed lack health insurance.

As for the home office deduction, the new bill contains language that would overturn a 1993 Supreme Court decision favoring the IRS. The decision in Soliman vs. IRS disallowed a home-office deduction when most work is performed outside the home. The new bill changes the rules with language stating that the home office deduction may be used when the majority of day-to-day administrative functions are performed in the home, and when there is no other principal place of business to expedite those functions.

Why the focus on home business? Bond said that more than nine million Americans operate home-based businesses, and that number is growing rapidly. "Clearly, the home business phenomenon represents one of the fastest-growing sectors of the economy. Unfortunately . . . the tax code has not kept pace with the new reality."

Robin Lawson has worked primarily in an office-at-home since 1983. Her business, MarkeTalk, specializes in marketing communications and copywriting. Please forward story ideas to: marketalk@compuserve.com.