Are most of you linked to/live in no income tax states? Obviously, this is the best way, but I don't see enforcement being easy for anyone even if it were questionable (the source would literally have to be a location that was different, not the payer of the contractor). Even though tax grabbing presumably will get up there, it seems mostly the Feds will be the main culprit, as they are aware already of most (who've filed) in the system. I think this is another reason why so many people are exiting the corporate type job - all of its headaches also include getting advance payments on their claim, and then asking them for it back.