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professional emergency medical services and full-time physician
staffing. In 1996, petitioner had 4 EDS Agreements with 3
Chicago area hospitals.
In order to fulfill its obligations under the EDS
Agreements, petitioner hired physicians to staff the hospital
emergency rooms. Petitioner entered into contracts entitled
“Independent Contractor Agreements” with such physicians. Twenty
five of these physicians were reclassified by respondent as
employees rather than independent contractors (reclassified
physicians).
Relying upon a longstanding, recognized practice of a
significant segment of the emergency medicine industry,
petitioner treated each of the reclassified physicians as an
independent contractor. During 1996, petitioner paid each of the
25 reclassified physicians more than $600. Petitioner did not
treat any of the reclassified physicians, or any other worker in
a substantially similar position, as an employee for any period
beginning after December 31, 1977.
Petitioner filed quarterly employment tax returns, Forms
941, for the quarters ended March 31, June 30, September 30, and
December 31, 1996, on July 2, July 31, and December 27, 1996, and
January 31, 1997, respectively. Petitioner filed a Federal
unemployment tax return, Form 940-EZ, Employer’s Annual Federal
Unemployment (FUTA) Tax Return, for 1996 on January 31,
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