26 U.S.C. § 7436 — Proceedings for determination of employment status

(a) Creation of remedy: During an audit of any person, if there is an actual controversy about the Secretary’s determination during an examination that (1) one or more individuals performing services for such person are employees of such person for subtitle C, or (2) such person is not entitled to section 530(a) treatment for an individual, the Tax Court^* may, after an appropriate pleading is filed, decide whether the determination is correct and determine the proper employment-tax amount. The redetermination has the force and effect of a Tax Court decision and may be reviewed in the same way.

(b) Limitations: (1) Petitioner. Only the person for whom the services are performed may file a pleading under this section. (2) Time for filing action. If the Secretary^* sends the petitioner notice of the determination by certified or registered mail, no proceeding may begin unless the pleading is filed before the 91st day after the mailing date. (3) No adverse inference from treatment while action is pending. If, while the proceeding is pending, the petitioner changes the employment-tax treatment of an individual involved in the proceeding, or of an individual in a substantially similar position, to treatment as an employee^*, the Tax Court may not consider that change in making its determination.

(c) Small-case procedures: (1) In general. At the petitioner’s option, with the Tax Court’s or one of its divisions’ agreement before the hearing, the proceeding may use the evidence, practice, and procedure rules under section 7463, despite section 7453, if the disputed employment taxes are $50,000 or less for each calendar quarter involved. (2) Finality of decisions. A decision in a proceeding under this subsection may not be reviewed in another court and may not be treated as precedent for another case that does not involve the same petitioner and the same determinations. (3) Certain rules to apply. Rules similar to the rules in the last sentence of subsection (a) and in section 7463(c), (d), and (e) apply to proceedings under this subsection.

(d) Special rules: (1) Restrictions on assessment and collection pending action, etc. The principles of sections 6213(a), (b), (c), (d), and (f), 6214(a), 6215, 6503(a), 6512, and 7481 apply as if the Secretary’s determination under subsection (a) were a notice of deficiency^*. (2) Awarding of costs and certain fees. Section 7430 applies to proceedings under this section.

(e) Employment tax: “Employment tax” means any tax imposed by subtitle C.