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mischaracterizing workers as independent contractors rather than
employees.
Combined's insurance operations were organized into three
divisions: Life, which exclusively sold life insurance policies;
Health, which exclusively sold health insurance policies; and
Accident, which sold accident and some health insurance policies.
Petitioner worked in the Accident division. The policies that
petitioner and the agents under his supervision sold provided
cash benefits in the event of the insured's death or serious
injury from specified accidents. The premiums on these policies
were fixed; they did not vary with the insured's age or health
status. The policies were renewable semiannually at the fixed
premium.
Petitioner was licensed solely to sell accident and health
insurance in the State of North Dakota. He did not have a
license to sell life insurance and was not required by the State
of North Dakota to carry a life insurance license in order to
sell the products he sold for Combined. Combined was required to
file separate reports with the North Dakota Commissioner of
Insurance concerning its sales of life insurance and its sales of
accident and health insurance.
Petitioner first claimed statutory employee status in an
amended return for tax year 1990. On the original return for
1990, he took business expense deductions on Schedule A, but he
took them on Schedule C on the amended return. When he filed as
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