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petitioners based on the rules, regulations, and procedures set
forth in the NOA amendment and NOA manual. Respondent argues
that Allstate's disciplinary procedures and annual reviews of
petitioners provided it with the opportunity to enforce its
rules, regulations, and procedures.
Petitioners contend that this issue has already been decided
by this Court, that Butts and Smithwick control. Respondent
counters that in prior cases (Butts, Smithwick, and Mosteirin)
"the Tax Court correctly articulated the applicable legal
standard in an employee versus independent contractor dispute as
one of the right to control", but did not apply the test
correctly. Respondent is half-right.
As the Court stated in Mosteirin:
In Butts and Smithwick, we concluded that the
taxpayers were professionals associated with Allstate
as independent contractors * * *. In Butts we made
detailed findings of fact and addressed the legal
arguments at some length. We found: (1) The taxpayer
exercised a high degree of control over the manner in
which he operated his business; (2) the taxpayer
personally incurred most of his business expenses; and
(3) the taxpayer bore the burden of risk of loss from
his business. In making these findings, we noted that
we were not persuaded by the fact that the agreement
between Allstate and the taxpayer referred to the
taxpayer as an employee or the fact that the taxpayer
reported his Allstate income as wages on his Federal
income tax return. Rather, we focused on the actual
contractual relationship between the contracting
parties. * * * [Mosteirin v. Commissioner, supra at
308.]
We dealt with respondent's assertion that the annual review
process showed that Allstate had the right to control NOA's in
Mosteirin:
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Last modified: May 25, 2011