James E. Anderson and Cheryl J. Latos - Page 17

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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,                     
               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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