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Section 530 is a relief provision that terminates a taxpayer’s employment tax liability with respect to an individual not treated as an employee if three statutory requirements are met: 1) reporting consistency; 2) substantive consistency; and 3) reasonable basis.
Under Section 530 (a) (2) (B), evidence that the IRS accepted the taxpayer’s classification of its workers during an audit may qualify as reasonable basis for continuing the same classification for those workers (and other workers holding substantially similar positions) in periods after the audit.
Congress introduced Section 530 nearly 40 years ago, in the Revenue Act of 1978, in an effort to counter aggres-sive IRS worker-classification audits on small businesses. 7 According to the legislative history, the congressional relief provided to companies by Section 530 was appropriate
Since 1978, Congress has provided so-called Section 530 relief to taxpayers who meet all of its requirements. [iv] These requirements include: (1) the consistency requirement; (2) the historic treatment requirement; and (3) the reasonable basis requirement.
Section 530, common law employee standards, and statu- tory employee standards, experience dictates that Revenue Agents often refuse to acknowledge defeat during an audit.
1 lip 2016 · Section 530 Relief. Section 530 of the Revenue Act of 1978, P.L. 95-600, is a relief provision for employers that unintentionally misclassify employees. Perhaps most notably, if Section 530 applies, a business may continue to treat workers as independent contractors, and the IRS cannot retroactively classify certain individuals as employees.
The taxpayer is not entitled to treatment under Section 530 of the Revenue Act of 1978 (section 530 relief). The Tax Court may decide whether the determination by the IRS is correct and the proper amount of employment tax, penalties and additions to tax, under such determination.
