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circumstances set forth in section 530(a)(2), and nothing else in
the record establishes what, if anything, petitioner relied on
during the periods at issue in not treating Mr. Grey as an
employee. Accordingly, petitioner must establish the
reasonableness of its treatment of Mr. Grey without the aid of
section 530(a)(2).
Petitioner cites Tex. Carbonate Co. v. Phinney, 307 F.2d 289
(5th Cir. 1962), and Automated Typesetting, Inc. v. United
States, 527 F. Supp. 515 (E.D. Wis. 1981), in support of its
assertion that it had a reasonable basis for not treating
Mr. Grey as an employee. We have already discounted petitioner’s
reliance on those cases in our rejection of petitioner’s argument
that the determination of whether a corporate officer is an
employee for employment tax purposes is based on the application
of common law factors. For the reasons discussed in part II.B.,
supra, and in light of section 3121(d)(1) and section 31.3121(d)-
1(b), Employment Tax Regs., we conclude that those cases do not
provide petitioner a reasonable basis for not treating Mr. Grey
as an employee. Indeed, one might fairly question whether it is
ever reasonable for a taxpayer to treat a statutory employee as a
nonemployee for employment tax purposes; i.e., whether a service
provider’s status as a statutory employee precludes the
application of section 530. So far as we are aware, no court has
ever squarely addressed this issue. As discussed below, our own
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