section 530(d) of the Revenue Act of 1978, the Secretary shall issue such regulations as the Secretary determines are necessary to carry out the purposes of this section. . (b) Withholding by payor in case of certain persons classified as not employees Section 3402 of the Internal Revenue Code of 1986 is amended by redesignating subsection (s) as subsection (t) and inserting after subsection (r) the following new subsection: (s) Extension of withholding to payments to certain persons classified as not employees (1) In general For purposes of this chapter and so much of subtitle F as relates to this chapter, compensation paid pursuant to a contract described in section 7706(d) shall be treated as if it were a payment of wages by an employer to an employee. (2) Amount withheld Except as otherwise provided under subsection (i), the amount to be deducted and withheld pursuant to paragraph (1) with respect to compensation paid pursuant to any such contract during any calendar year shall be an amount equal to 5 percent of so much of the amount of such compensation as does not exceed $20,000. . (c) Direct sellers of promotional products Subsection (b) of section 3508 is amended— (1) in paragraph (2)(A)— (A) in clause (ii), by striking or at the end