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(2) Employment status.-–The term “employment
status” means the status of an individual, under the
usual common law rules applicable in determining the
employer-employee relationship, as an employee or as an
independent contractor (or other individual who is not
an employee).
* * * * * * *
(e) Special rules for application of section.--
(1) Notice of availability of section.--An
officer or employee of the Internal Revenue Service
shall, before or at the commencement of any audit
inquiry relating to the employment status of one or
more individuals who perform services for the taxpayer,
provide the taxpayer with a written notice of the
provisions of this section.
II. Mr. Grey’s Status as an Employee for Employment Tax Purposes
A. Petitioner’s S Corporation Theory
As a preliminary matter, we summarily reject petitioner’s
argument that, because it is an S corporation that has passed its
net income through to Mr. Grey as its sole shareholder pursuant
to section 1366, there can be no employer-employee relationship
between it and Mr. Grey. That argument is similar to the
argument made by the taxpayer in Veterinary Surgical Consultants,
P.C. v. Commissioner, 117 T.C. 141, 145 (2001), a case in which,
it appears, the taxpayer was advised by Mr. Grey, who was the
source of the taxpayer’s argument there. See id. at 143-144. We
shall not here repeat our refutation of that argument, which can
be found in Veterinary Surgical Consultants, P.C. Id. at 145-
146.
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