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(A) judicial precedent or published rulings,
whether or not relating to the particular industry or
business in which the taxpayer is engaged, or technical
advice, a letter ruling, or a determination letter
pertaining to the taxpayer; or
(B) a past Internal Revenue Service audit (not
necessarily for employment tax purposes) of the taxpayer,
if the audit entailed no assessment attributable to the
taxpayer’s employment tax treatment of individuals
holding positions substantially similar to the position
held by the individual whose status is at issue * * *; or
(c) long-standing recognized practice of a
significant segment of the industry in which the
individual was engaged * * *.
A taxpayer who fails to meet any of the safe havens is still
entitled to relief if the taxpayer can demonstrate, in some other
manner, a reasonable basis for not treating the individual as an
employee. Id.
Here, petitioner asserts that its position is supported by the
following excerpt from Durando v. United States, 70 F.3d 548, 552
(9th Cir. 1995):
[It is] improper to treat income earned by a corporation
through its trade or business as though it were earned
directly by its shareholders, even when, as here, the
shareholders’ services help to produce that income. An
S corporation’s income passes through to its shareholders
not because they helped to create that income, but
because they are shareholders.
The excerpt relied upon by petitioner does not support
petitioner’s position. Respondent is not attempting to treat
petitioner’s income as though the income were earned directly by
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Last modified: May 25, 2011