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then, for purposes of applying such taxes for such
period with respect to the taxpayer, the individual
shall be deemed not to be an employee unless the
taxpayer had no reasonable basis for not treating such
individual as an employee.
(2) Statutory standards providing one method of
satisfying the requirements of paragraph (1).-- For
purposes of paragraph (1), a taxpayer shall in any case
be treated as having a reasonable basis for not
treating an individual as an employee for a period if
the taxpayer’s treatment of such individual for such
period was in reasonable reliance on any of the
following:
(A) judicial precedent, published rulings,
technical advice with respect to the taxpayer, or a
letter ruling to the taxpayer;
(B) a past Internal Revenue Service audit of the
taxpayer in which there was no assessment attributable
to the treatment (for employment tax purposes) of the
individuals holding positions substantially similar to
the position held by this individual; or
(C) long-standing recognized practice of a
significant segment of the industry in which such
individual was engaged.
In specified circumstances, Section 530(e)(4) places the
burden of proof on the Commissioner with respect to certain
issues under Section 530, but this provision does not affect our
analysis here. Section 530(e)(4) applies to periods after
December 31, 1996. Small Business Job Protection Act of 1996,
Pub. L. 104-188, sec. 1122(b)(3), 110 Stat. 1767. A taxpayer
desiring to take advantage of Section 530(e)(4) first must
establish a prima facie case that it was reasonable not to treat
an individual as an employee and must have fully cooperated with
the Secretary. Because, as explained in detail below, petitioner
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