Section 530 Relief

Section 530 relief in employment tax cases with the irs as a business owner you have to manage a lot of complicated tax issues.

Section 530 relief. It is not necessary for the business to claim section 530 relief for it to be applicable. Taxpayer argued that for the first 11 quarters gevity was the statutory employer and consequently it sought relief under section 530 which provides relief in instances where a common law employer has reasonably believed that the employee s wages are exempt from payroll taxes. Section 530 relief is an example of a safe harbor provision under some federal laws.

2 2017 catalog number 22927m department of the treasury internal revenue service www irs gov. It is important that you hire a qualified accountant or tax lawyer to help you manage your responsibilities or you might make a costly mistake that could lead to enormous taxes and penalties. Section 530 of the revenue act of 1978 section 530 may provide relief to certain taxpayers when those taxpayers are audited for classifying workers as independent contractors.

Since its passage section 530 has been relied on by various industries and companies in independent contractor classification disputes with the irs. If your business has been selected for an employment tax examination to determine whether you correctly treated certain workers as independent contractors you may be entitled to section 530 relief. Section 530 provides employers with relief from federal employment tax obligations if three statutory requirements are met.

In addition to the safe haven standards specified in section 530 a 2 a taxpayer is entitled to relief when it can demonstrate any other reasonable basis for treating its workers as independent contractors. Department of the treasury internal revenue service. A safe harbor provision allows protection from liability or payment if the person or business can show a good faith effort to comply with the law.

Section 530 provides businesses with relief from federal employment tax obligations if certain requirements are met. The courts have liberally construed any other reasonable basis in favor of the taxpayer. Since its passage section 530 has been relied on by various industries and companies in independent contractor classification disputes with the irs.

Through the safe harbor provisions of section 530 of the revenue act of 1978 congress sought to provide relief for taxpayers that had consistently treated workers as independent contractors and exercised good faith in making the decision to do so even though under common law the workers might be considered employees. Section 530 does not extend to the worker who may still be liable for the employee share of fica not self employment tax. 23 congress s motivation for enacting the safe harbor provisions is described in a 1979 joint committee on taxation report.