Juan Ramirez - Page 12
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prima facie case that it was reasonable not to treat an
individual as an employee for employment tax purposes. Small
Business Job Protection Act of 1996, Pub. L. 104-188, sec.
1122(a), 110 Stat. 1766 (adding subsection (e) to Revenue Act
section 530). Because, as explained below, petitioner has failed
to establish a prima facie case that his treatment of his workers
for employment tax purposes was reasonable, respondent does not
bear the burden of proof in this case.
Revenue Act section 530(a)(2) sets forth three statutory
safe harbors for purposes of establishing reasonable basis.
Reasonable reliance upon any of the circumstances enumerated in
subparagraph (A), (B), or (C) of Revenue Act section 530(a)(2) is
deemed sufficient to establish the requisite reasonable basis.
With regard to Revenue Act section 530(a)(2)(A), petitioner has
presented no judicial precedent, published ruling, technical
advice, or letter ruling on which he relied in treating his
workers as independent contractors. With regard to subparagraphs
(B) and (C), petitioner has not provided evidence that there was
a past employment tax audit in which his classification of the
workers was not challenged, nor has he provided evidence that
treating the workers as independent contractors was in accordance
with a long-standing practice within the waterproofing industry.
The safe havens of Revenue Act section 530(a)(2) are therefore
inapplicable on the record before us. We conclude that
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Last modified: March 27, 2008