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entire working relationship. Petitioner performed some of his
work for IDA from his home in Pennsylvania, where he was able to
connect through his laptop computer to IDA’s computer network to
access nonsecure information.
Over the years, petitioner steadily increased the hours he
worked for IDA. He eventually stopped accepting consulting work
for other companies and Government agencies and, since 1995, has
worked exclusively for IDA. By 1995, petitioner was working more
than 1,000 hours in each 6-month period. Because of the number
of hours petitioner worked for IDA, IDA was prohibited from
paying petitioner for the expenses he incurred for his trips
between Lancaster and Alexandria. In 1995, IDA began treating
petitioner as an employee; IDA treated petitioner’s compensation
as wages, paid the employer’s portion of the employment taxes,
and issued petitioner Forms W-2, Wage and Tax Statement, instead
of Forms 1099-MISC, Miscellaneous Income. IDA also stopped
reimbursing him for the expenses he incurred for his trips
between Lancaster and Alexandria.
During 2001, petitioner rented an apartment in Washington,
D.C., where he stayed when he was working in Alexandria. During
2002, petitioner stayed in hotels when he was working in
Alexandria.
Petitioners timely filed their Federal income tax returns
for 2001 and 2002. IDA issued petitioner Forms W-2 reporting
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Last modified: March 27, 2008