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employee on all tax returns for periods after December 31, 1978.
Third, the taxpayer must have had a reasonable basis for not
treating the individual as an employee. To qualify for relief
under section 530(a)(1), a taxpayer must satisfy all three
requirements.
Respondent concedes that petitioner meets the first
requirement and does not argue that petitioner fails to meet the
second requirement. Rather, respondent asserts that petitioner
fails to meet the third requirement; i.e., respondent asserts
that petitioner had no reasonable basis for not treating Mr. Grey
as an employee.
B. Reasonable Basis
Section 530(a)(2) provides a safe harbor for satisfying the
reasonable basis requirement of section 530(a)(1). Under that
safe harbor, a taxpayer will be treated as having a reasonable
basis for not treating an individual as an employee if it can
establish that, in so treating the individual, it reasonably
relied on the existence of any of the circumstances listed in
subparagraphs (A), (B), and (C) of section 530(a)(2).8 The
parties did not stipulate whether petitioner relied on any of the
8 Sec. 530(e)(4) provides that, if a taxpayer makes a prima
facie case that it meets the requirements of the sec. 530(a)(2)
safe harbor, then the Secretary bears the burden of proving
otherwise. Sec. 530(e)(4) does not apply to the periods here at
issue, see supra note 2, and, in any event, petitioner has not
made such a prima facie case.
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