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respondent’s motion to dismiss. In the response, petitioner
stated it wanted to file an amended petition in which petitioner
disputed respondent’s determination that petitioner’s sales
personnel and graphics personnel were employees rather than
independent contractors but no longer disputed the adjustments to
tax and interest determined by respondent. We granted
respondent’s motion to dismiss and filed the amended petition.
On December 18, 2000, respondent filed an answer to the
amended petition (first answer). In the first answer, respondent
affirmatively alleged that Will L. Evans and Sherry L. Evans (Mr.
and Mrs. Evans), shareholders of petitioner, were employees of
petitioner during 1993, 1994, and 1995, and that petitioner is
not entitled to “safe harbor” relief as provided by section 530
of the Revenue Act of 1978, Pub. L. 95-600, 92 Stat. 2763, 2885
(section 530), with respect to Mr. and Mrs. Evans’ classification
as employees. Respondent affirmatively alleged additional facts
to support this conclusion, including the fact that petitioner
compensated Mr. and Mrs. Evans through the payment of commissions
and other wages disguised as shareholder loans.
On April 18, 2001, petitioner filed a Motion for Leave to
File Second Amended Petition (motion for leave). In the motion
for leave, petitioner relied on Congress’s amendment of section
7436(a), retroactive to the effective date (August 5, 1997) of
section 7436(a), which provided this Court with jurisdiction to
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