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required Federal employment tax returns on a basis consistent
with this treatment. Petitioner never treated the drivers as
employees and consistently issued them Forms 1099. Therefore,
the threshold requirement petitioner must satisfy to qualify for
section 530 relief is that he had a reasonable basis for treating
the drivers as nonemployees.
Section 530(a)(2) provides that reasonable reliance on any
of three "safe harbors" shall be treated as a reasonable basis
for not treating a worker as an employee. See Boles Trucking,
Inc. v. United States, supra. Paragraph (2) provides:
For purposes of paragraph (1), a taxpayer shall in any
case be treated as having a reasonable basis for not
treating an individual as an employee for a period if
the taxpayer's treatment of such individual for such
period was in reasonable reliance on any of the
following:
(A) judicial precedent, published rulings,
technical advice with respect to the taxpayer, or
a letter ruling to the taxpayer;
(B) a past Internal Revenue Service audit of
the taxpayer in which there was no assessment
attributable to the treatment (for employment tax
purposes) of the individuals holding positions
substantially similar to the position held by this
individual; or
(C) long-standing recognized practice of a
significant segment of the industry in which the
individual was engaged.
Petitioner provided no evidence that he had a reasonable
reliance on any of these safe harbor provisions. Respondent
called as witnesses five of petitioner's former drivers, all of
whom were employed as truck drivers at other times for other
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