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Typically, statutory employees are not entitled to
participate in employee benefit plans. There is an exception,
however, for full-time life insurance salespeople who are treated
as employees for purposes of certain employee benefit programs
maintained by a business. Sec. 7701(a)(20). We find this factor
is neutral.
9. Conclusion as to Employment Status
On balance, considering the record and weighing all of the
factors, we conclude that during the years in issue petitioner
was a common law employee, rather than a statutory employee under
section 3121(d)(3)(B). Therefore, petitioner is not entitled to
report gross income and expenses on Schedule C. Accordingly, we
sustain respondent’s determination on this issue.
B. Section 6662(a) Accuracy-Related Penalty
The final issue for decision is whether petitioners are
liable for accuracy-related penalties under section 6662(a) for
the years in issue.
Section 6662(a) imposes a penalty equal to 20 percent of any
underpayment of tax that is attributable to either negligence or
disregard of rules or regulations, or a substantial
understatement of income tax. See sec. 6662(a) and (b)(1) and
(2).
The term “negligence” includes any failure to make a
reasonable attempt to comply with the provisions of the internal
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Last modified: May 25, 2011