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respondent began an examination of petitioner’s 1996 employment
tax liability. By letter dated January 8, 1999, respondent
notified petitioner of his proposed determinations that
petitioner was not entitled to relief under section 530 and that
certain workers should be reclassified as employees, and
respondent listed the attendant adjustments to petitioner’s
Federal employment tax liability for 1996. On May 14, 1999,
respondent provided petitioner with Publication 1976, which
provided written notice of the provisions of section 530.
OPINION
I. Section 530 Relief
Section 530 operates in enumerated circumstances to afford
relief from employment tax liability, notwithstanding the actual
relationship between the taxpayer and the individual performing
services. The statute provides, in part:
SEC. 530. CONTROVERSIES INVOLVING WHETHER INDIVIDUALS
ARE EMPLOYEES FOR PURPOSES OF THE EMPLOYMENT
TAXES.
(a) Termination of Certain Employment Tax Liability–-
(1) In general.--If--
(A) for purposes of employment taxes,
the taxpayer did not treat an individual as
an employee for any period, and
(B) in the case of periods after
December 31, 1978, all Federal tax returns
(including information returns) required to
be filed by the taxpayer with respect to such
individual for such period are filed on a
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