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An employment tax specialist conducted the examination of
petitioner (the examining agent). The examining agent
interviewed Ms. Lopez. The examining agent also received written
responses to questionnaires she provided to four of petitioner’s
instructors whom she had randomly selected from a list Ms. Lopez
provided.
In the interviews of the four instructors, three
acknowledged they were given “manuals”, but none of them believed
the directives were mandatory. Two of the three who received the
manuals specifically stated they were not mandatory. The fourth
instructor denied that any manual was issued. The documents in
question were not titled “manuals” but rather were guidelines for
conducting dance classes, instructions in first aid, and an
“Employee Code of Conduct”. The latter merely set forth basic
behavioral norms and prohibited vulgar language.
After reviewing Ms. Lopez’s statements and the instructors’
responses, the examining agent determined that petitioner and the
instructors had created employer-employee relationships rather
than principal-independent-contractor relationships.
Specifically, the Examining Agent concluded that: (1) Petitioner
did not qualify for section 530 relief as provided in the Revenue
Act of 1978, Pub. L. 95-600, 92 Stat. 2885, as amended; (2)
petitioner exercised sufficient behavioral and financial control
over its instructors to classify them as employees; and (3)
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Last modified: May 25, 2011