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Under these circumstances, it is difficult and
impractical for the boat operator to keep the
necessary records to calculate his tax obligations as
an employer, and it is equally difficult for him to
withhold the appropriate taxes for payment. * * *
Another factor contributing to the difficulty in
which such boat operators find themselves is the
nature of the remuneration paid to their crewmen. In
many cases, the crewmen are paid no regular salary,
but instead receive a portion of the catch. In
practice, the catch is often sold upon return to
shore, usually by the boat operator, and each crewman
is immediately paid a percentage of the proceeds of
the catch that is equivalent to the portion of the
catch for which he agreed to work. In view of the
basic informality of these arrangements, and the
consequent difficulty in adhering to the obligations
required of employers by the Internal Revenue Code,
the committee believes it appropriate to remove these
obligations from certain small boat operators by
treating their crewmen as self-employed individuals.
The committee believes that this will recognize the
basic nature of the arrangement between the boat
operators and the crewmen since the crewmen, under
these arrangements, should find it much simpler and
more convenient to calculate and report their own
income for tax purposes than do the boat operators.
In treating these situations as instances of
employment of crewmen by boat operators, the Internal
Revenue Service has not only required current payment
of employment taxes by the boat operators, but has
also assessed these taxes retroactively for all tax
years still open under the statute of limitations.
As a result of possibly sizeable assessments, many
boat operators may face bankruptcy. [S. Rept. 94-938
(Pt. I), at 385 (1976), 1976-3 C.B. (Vol. 3) 49,
423.]
As alluded to in the Senate report and explained in more
detail by the Joint Committee on Taxation in its General
Explanation of the Revenue Act of 1976, Congress extended
retroactive relief to small fishing boat owners to prevent
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