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establish that it had any reasonable basis to treat the six
workers as independent contractors.
The statute provides a safe harbor so that a taxpayer shall
be treated as having a reasonable basis for not treating an
individual as an employee if he “reasonably relied” on: (1)
Judicial precedent, published rulings, or technical advice or a
letter ruling issued to the taxpayer; (2) past audit treatment of
positions similar to those held by the individuals under
consideration; or (3) longstanding practice in the taxpayer’s
industry.
A taxpayer who fails to dock his ship in any of the safe
harbors is still entitled to relief if he can demonstrate, in
some other manner, a reasonable basis for not treating the
individual as an employee. Veterinary Surgical Consultants, P.C.
v. Commissioner, 117 T.C. 141, 147 (2001), affd. sub nom. Yeagle
Drywall Co. v. Commissioner, Fed. Appx. (3d Cir., Dec.
18, 2002). Although the reasonable basis requirement is to be
construed liberally in favor of taxpayers, it is nevertheless
petitioner’s burden to show by a preponderance of the evidence
that it had a reasonable basis for its treatment of the video
workers as other than employees.4 Springfield v. United States,
4 Sec. 530(e)(4) places the burden of proof on the
Secretary with respect to certain aspects of sec. 530. Sec.
530(e)(4) applies to disputes involving periods after Dec. 31,
1996, and therefore does not apply to this case. Small Business
(continued...)
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Last modified: May 25, 2011