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(2) Statutory standards providing one method of
satisfying the requirements of paragraph (1).-- For
purposes of paragraph (1), a taxpayer shall in any case
be treated as having a reasonable basis for not
treating an individual as an employee for a period if
the taxpayer’s treatment of such individual for such
period was in reasonable reliance 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.
Respondent does not dispute that petitioner meets the first two
requirements of Revenue Act section 530(a)(1). Petitioner has
never treated any of his workers as employees for Federal
employment tax purposes, and he has timely filed all required
returns for the periods in issue and for prior periods on a basis
consistent with his treatment of the workers as independent
contractors. However, respondent argues that petitioner did not
have a reasonable basis for treating his workers as independent
contractors instead of employees, and thus fails the third
element of the Revenue Act section 530(a)(1) test.
Under Revenue Act section 530(e)(4), the burden of proof is
placed on respondent if, in addition to cooperating with
reasonable requests from respondent, petitioner establishes a
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