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For a taxpayer to have a reasonable basis for not treating
an individual as an employee under the judicial precedent safe
harbor, the judicial precedent relied upon must have evaluated
the employment relationship through a Federal common law
analysis. See sec. 3121(d); Nu-Look Design, Inc. v.
Commissioner, T.C. Memo. 2003-52, affd. 356 F.3d 290 (3d Cir.
2004); secs. 31.3121(d)-1(c), 31.3306(i)-1, Employment Tax Regs.
To come within the safe harbor, “the taxpayer must have relied on
the alleged authority during the periods in issue, at the time
the employment decisions were being made. The statute does not
countenance ex post facto justification.” Nu-Look Design, Inc.
v. Commissioner, supra.
The record does not indicate that the BWC, the OIC, or the
court of common pleas evaluated the employment relationships of
petitioner’s former drivers, Chatfield and Jamison, through a
common law analysis. Only the BWC’s vacated order in the Jamison
case indicated the grounds for its decision: “The signed
agreement by and between Peno Trucking Inc. and the Injured
Worker dated 3/3/97.” Moreover, nothing in the record indicates
the rulings concerning Jamison and Chatfield were relied upon at
the time petitioner’s employment decisions were made. Petitioner
failed to establish that it relied upon judicial precedent or
otherwise provided a reasonable basis to disregard section
3121(d)(2) and sections 31.3121(d)-1(c) and 31.3306(i)-1,
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Last modified: November 10, 2007