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

submitted 29 years ago by Pub. L. 105-34 to r/title-26-INTERNAL-REVENUE-CODE · 530 words · no verdicts yet

in plain englishAI-generated · not legal advice

This section lets any person ask the Tax Court to review certain employment-status determinations made by the Secretary during an audit. The pleading must be filed before the 91st day after the Secretary mails the notice, and qualifying disputes may use small-case procedures.

(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.

the actual law source: uscode.house.gov ↗public domain
(a) Creation of remedy

If, in connection with an audit of any person, there is an actual controversy involving a determination by the Secretary as part of an examination that—

(1)

one or more individuals performing services for such person are employees of such person for purposes of subtitle C, or

(2)

such person is not entitled to the treatment under subsection (a) of section 530 of the Revenue Act of 1978 with respect to such an individual,

upon the filing of an appropriate pleading, the Tax Court may determine whether such a determination by the Secretary is correct and the proper amount of employment tax under such determination. Any such redetermination by the Tax Court shall have the force and effect of a decision of the Tax Court and shall be reviewable as such.

(b) Limitations
(1) Petitioner

A pleading may be filed under this section only by the person for whom the services are performed.

(2) Time for filing action

If the Secretary sends by certified or registered mail notice to the petitioner of a determination by the Secretary described in subsection (a), no proceeding may be initiated under this section with respect to such determination unless the pleading is filed before the 91st day after the date of such mailing.

(3) No adverse inference from treatment while action is pending

If, during the pendency of any proceeding brought under this section, the petitioner changes his treatment for employment tax purposes of any individual whose employment status as an employee is involved in such proceeding (or of any individual holding a substantially similar position) to treatment as an employee, such change shall not be taken into account in the Tax Court’s determination under this section.

(c) Small case procedures
(1) In general

At the option of the petitioner, concurred in by the Tax Court or a division thereof before the hearing of the case, proceedings under this section may (notwithstanding the provisions of section 7453) be conducted subject to the rules of evidence, practice, and procedure applicable under section 7463 if the amount of employment taxes placed in dispute is $50,000 or less for each calendar quarter involved.

(2) Finality of decisions

A decision entered in any proceeding conducted under this subsection shall not be reviewed in any other court and shall not be treated as a precedent for any other case not involving the same petitioner and the same determinations.

(3) Certain rules to apply

Rules similar to the rules of the last sentence of subsection (a), and subsections (c), (d), and (e), of section 7463 shall apply to proceedings conducted under this subsection.

(d) Special rules
(1) Restrictions on assessment and collection pending action, etc.

The principles of subsections (a), (b), (c), (d), and (f) of section 6213, section 6214(a), section 6215, section 6503(a), section 6512, and section 7481 shall apply to proceedings brought under this section in the same manner as if the Secretary’s determination described in subsection (a) were a notice of deficiency.

(2) Awarding of costs and certain fees

Section 7430 shall apply to proceedings brought under this section.

(e) Employment tax

The term “employment tax” means any tax imposed by subtitle C.

Source credit: (Added Pub. L. 105–34, title XIV, § 1454(a), Aug. 5, 1997, 111 Stat. 1055; amended Pub. L. 105–206, title III, § 3103(b)(1), July 22, 1998, 112 Stat. 731; Pub. L. 106–554, § 1(a)(7) [title III, § 314(f)], Dec. 21, 2000, 114 Stat. 2763, 2763A–643.)

history & why it existsrecord from the source credit
  • 1997Enacted · Pub. L. 105-34 · 111 Stat. 1055
  • 1998Amended · Pub. L. 105-206 · 112 Stat. 731
  • 2000Amended · Pub. L. 106-554 · 114 Stat. 2763, 2763

A history note hasn’t been published yet. The record shows enactment by Pub. L. 105-34 on 1997-08-05.

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