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question which remains is whether petitioner had a reasonable
basis for treating the drivers as nonemployees.
A taxpayer is treated as having a reasonable basis for not
treating an individual as an employee if the taxpayer reasonably
relied on any of the following:
(A) judicial precedent, published rulings,
technical advice with respect to the taxpayer, or a
letter ruling to the taxpayer;
(B) a past Internal Revenue Service audit of the
taxpayer in which there was no assessment attributable
to the treatment (for employment tax purposes) of the
individuals holding positions substantially similar to
the position held by this individual; or
(C) long standing recognized practice of a
significant segment of the industry in which such
individual was engaged.
Sec. 530(a)(2).22
Petitioner’s sole contention is that it relied upon judicial
precedent in determining its drivers were independent
contractors, basing its decision on the court of common pleas’
rulings and the administrative and appeals decisions finding that
two of petitioner’s drivers were independent contractors.
22 A taxpayer who fails to come within any of the safe
harbors is still entitled to relief if the taxpayer can
demonstrate, in some other manner, a reasonable basis for not
treating the individual as an employee. Veterinary Surgical
Consultants, P.C. v. Commissioner, 117 T.C. 141, 147 (2001),
affd. sub nom. Yeagle Drywall Co. v. Commissioner, 54 Fed. Appx.
100 (3d Cir. 2002).
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Last modified: November 10, 2007