HAVEN'T PAID TAXES ON HOUSEHOLD HELP? YOU'RE NOT ALONE

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, February 9, 1993                   TAG: 9302090211
SECTION: NATL/INTL                    PAGE: A-1   EDITION: METRO 
SOURCE: Associated Press
DATELINE:                                 LENGTH: Medium
HAVEN'T PAID TAXES ON HOUSEHOLD HELP? YOU'RE NOT ALONE
If you have ever hired a baby sitter, paid a teen-ager to mow the lawn or had a housekeeper clean your home, there's a good chance you violated the law that Commerce Secretary Ron Brown admits to breaking.
The violation hasn't cost Brown his job, and it isn't likely to have dire implications for many of the other millions of Americans who participate in what amounts to an enormous underground cash economy.
It has, however, forced people to pay attention to one of the most frequently violated laws in the country - the one that requires employers to pay Social Security taxes for any domestic employee who earns more than $50 in any one quarter of the year.
"The problem's been out there for years in terms of nonpayment and everybody knows it," said Evelyn Morton, a lobbyist for the American Association of Retired Persons.
And if they didn't before, they probably do now.
The issue came up recently when Zoe Baird, President Clinton's first choice for attorney general, admitted to hiring two undocumented workers and failing to pay their Social Security taxes. Then another candidate for attorney general, Charles Ruff, was removed from consideration after conceding that he, too, had failed to pay Social Security taxes for a domestic worker.
On Sunday, Brown acknowledged that he had failed to pay Social Security taxes for a housekeeper who worked for him about three hours a week. Because she worked so few hours, he said, he didn't think he needed to bother filing taxes.
Many Americans probably think the same thing. The Internal Revenue Service concedes far more people probably break the law than obey it.
In testimony before Congress in 1991, then-IRS Commissioner Fred Goldberg estimated that 500,000 people file Social Security taxes for domestic workers. He estimated that 2 million people ought to be doing so.
That figure may be low.
Some IRS information centers said that since Baird withdrew her name, they've been getting more phone calls from people wanting information about how to comply with the law.
"We have seen a moderate increase," said Dominic LaPonzina, spokesman for the IRS' Baltimore regional center.
In the Philadelphia regional center, "The phone-bank people are saying on break, `I got a Ron Brown-type question' or `I got a Zoe Baird-type question again,' " said spokesman Jim Wondolowski.
Part of the problem is how easily the $50 threshold is exceeded. In the 1950s, when the law was passed, $50 bought a lot of baby-sitting, housecleaning or lawn-mowing. The amount never was raised, but inflation has made $50 in 1950 dollars equivalent to about $285 in today's money.
The law was revamped in a bill that passed Congress last year, but the amount wasn't raised significantly. Rather, Congress tried to reduce the amount of paperwork by changing the $50 quarterly threshold to a $300 annual one.
The bill, which was vetoed by President Bush for reasons that had nothing to do with the tax threshold, also would have allowed employers to have their domestic workers' taxes withheld from their own incomes.
The measure is being resurrected this year.
It is important to groups like the American Association of Retired People because people who work off the books can come in for a rude shock when they reach retirement age and find they don't qualify for Social Security.
"The problem comes down to wanting the money when you're young and needing the benefit when you're older," Morton of the AARP said. "And when you need the benefit, it's not there."

by Archana Subramaniam by CNB