Uncle Sam’s War on the Independent Contractor

IN May 1976 the Internal Revenue Service hinted to Reginald and Barbara Dwyer that they might be in trouble for nonpayment of certain taxes. The Dwyers, however, were not too concerned. After all, their small Vermont logging operation had been audited for 1969 and 1970, and the Internal Revenue Service had found nothing amiss. But unbeknown to the Dwyers, the IRS had instituted a massive policy change in the early 1970s, and the Vermont couple was fated to be among its most conspicuous victims.

To understand why the IRS picked on the Dwyers, it is necessary to understand how the small-scale contract logging system works—and has worked in rural New England for more than a century. First, a general logging contractor, like Reg Dwyer, acquires stumpage or logging rights to a woodlot. Then he arranges with several independent specialists to work together as a team to get the timber or cordwood out to the mill. The feller drops the tree and cuts off its limbs and top. The skidder hauls the trunks down to the collecting yard. He does this with horses, a bulldozer, or most commonly, nowadays, a large four-wheel-drive tractor called a skidder, which may cost as much as $80,000. When the skidder unhitches the trunks at the yard, they are cut into the right lengths by the next operator, the cutter. Finally the trucker, equipped with a large tractor-trailer and a hydraulic loader, loads the wood and hauls it to the mill.

JM

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John McClaughry

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IN May 1976 the Internal Revenue Service hinted to Reginald and Barbara Dwyer that they might be in trouble for nonpayment of certain taxes. The Dwyers, however, were not too concerned. After all, their small Vermont logging operation had been audited for 1969 and 1970, and the Internal Revenue Service had found nothing amiss. But unbeknown to the Dwyers, the IRS had instituted a massive policy change in the early 1970s, and the Vermont couple was fated to be among its most conspicuous victims.

To understand why the IRS picked on the Dwyers, it is necessary to understand how the small-scale contract logging system works—and has worked in rural New England for more than a century. First, a general logging contractor, like Reg Dwyer, acquires stumpage or logging rights to a woodlot. Then he arranges with several independent specialists to work together as a team to get the timber or cordwood out to the mill. The feller drops the tree and cuts off its limbs and top. The skidder hauls the trunks down to the collecting yard. He does this with horses, a bulldozer, or most commonly, nowadays, a large four-wheel-drive tractor called a skidder, which may cost as much as $80,000. When the skidder unhitches the trunks at the yard, they are cut into the right lengths by the next operator, the cutter. Finally the trucker, equipped with a large tractor-trailer and a hydraulic loader, loads the wood and hauls it to the mill.