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III. Act Section 530 Relief
Act section 530 grants relief from the obligation to pay
employment taxes to employers who incorrectly treat wage payments
to employees as payments to independent contractors if certain
requirements are met. Act section 530(a)(1) provides in relevant
part:
(1) In general.--If--
(A) for purposes of employment taxes, the taxpayer
did not treat an individual as an employee for any
period * * *, and
(B) in the case of periods after December 31,
1978, all Federal tax returns (including information
returns) required to be filed by the taxpayer with
respect to such individual for such period are filed on
a basis consistent with the taxpayer’s treatment of
such individual as not being an employee,
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.
Act section 530(a)(3) limits the relief available under act
section 530(a)(1) by providing that act section 530 relief is not
available if the “taxpayer (or a predecessor)” treated any
individual holding a “substantially similar position as an
employee”. An employer must satisfy all of the requirements of
act section 530 to qualify for relief under that section. See
Ewens & Miller, Inc. v. Commissioner, 117 T.C. 263 (2001).
Petitioner treated all of the workers as employees in 1999,
and petitioner filed Forms W-2, 940, and 941 for 1999 consistent
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