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employee).” Petitioner apparently believes that the purported
lack of common law control makes its treatment of Ridge
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 Ridge as an
employee in 1996, 1997, or 1998. We conclude and have found as a
fact that petitioner did not have a reasonable basis for failing
to characterize Ridge as an employee. Consequently, relief from
employment tax liability is not available to petitioner under
Section 530.
Lastly, in connection with Section 530, petitioner raises a
due process argument. Section 530(e)(1) provides that the
Internal Revenue Service “shall, before or at the commencement of
any audit inquiry relating to the employment status of one or
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