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under the usual common law rules applicable in determining the
employer-employee relationship, as an employee or as an
independent contractor (or other individual who is not an
employee).” Petitioner apparently believes that the purported
lack of common law control makes its treatment of Murdock
reasonable within the meaning of Section 530 and that the above
definition supports this view.
Again, however, petitioner’s approach is contrary to
controlling statutes and to the facts of this case. As a matter
of construction, Section 530(c)(2) defines employment status for
purposes of certain provisions of Section 530 not germane here.
It does not purport to override or interpret the definition of
“employee” in section 3121(d) and related regulations. Hence,
Section 530(c)(2) does not render it rational for petitioner to
have ignored the statutory mandate regarding corporate officers
and to have taken a position that was not otherwise supported by
authority. Petitioner also does not claim in actuality to have
relied on Section 530(c)(2) in deciding not to treat Murdock as
an employee in 1995, 1996, or 1997. We conclude and have found
as a fact that petitioner did not have a reasonable basis for
failing to characterize Murdock as an employee. Consequently,
relief from employment tax liability is not available to
petitioner under Section 530.
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