He's saying that any consultancy, however structured, will be disregarded if its consultants perform too much of their work for a single client over the course

He's saying that any consultancy, however structured, will be disregarded if its consultants perform too much of their work for a single client over the course of its tax year. The IRS' reasoning is that the consultancy is just a way for the client to avoid paying payroll taxes and other taxes incident to the employee relationship. The result to the client: a deficiency for not paying those taxes. The result to the consultancy: a deficiency for taking now-inapplicable deductions or for paying the wrong type of taxes. Yes, its silly, but that's the way the tax code works...