Do you

Qualify

forRelief

Section

530?

unde

Department of the Treasury

Internal Revenue Service

Section 530 provides 

businesses with 

relief from federal 

employment tax 

obligations if certain 

requirements are met. 

Publication 1976 (Rev. 2-2017) Catalog Number 22927M Department of the Treasury Internal Revenue Service www.irs.gov
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. You 

will not owe employment taxes for these 

workers if you meet the relief requirements

described below. If you do not meet these 

relief requirements, the IRS will determine 

whether the workers are independent 

contractors or employees and whether you 

owe employment taxes for those workers.

Section 530 Relief Requirements:

To receive relief, you must meet all three of 

the following requirements:

I. Reporting Consistency

First, you must have timely filed all required 

federal tax returns (including information 

returns) consistent with your treatment of 

each worker as not being an employee. This 

means, for example, that if you treated a 

worker as an independent contractor and 

paid him or her $600 or more, you must 

have filed Form 1099-MISC for the worker. 

Relief is not available for any year and for 

any workers for whom you did not file the 

required information returns.

II. Substantive Consistency

In addition, you (and any predecessor 

business) must have treated the workers, 

and any similar workers, as independent 

contractors. If you treated similar workers 

as employees, this relief provision is not 

available. If you are paying an individual 

who is providing services as a test 

proctor or room supervisor assisting in 

the administration of college entrance or 

placements examinations, the substantive 

consistency requirement does not apply 

with respect to services performed after 

December 31, 2006, (and remuneration 

paid with respect to such services). The 

provision applies if the individual (1) is 

performing the services for a tax-exempt 

organization, and (2) is not otherwise treated 

as an employee of such organization for 

purposes of employment taxes.

III. Reasonable Basis

Finally, you must have had a reasonable 

basis for not treating the workers as 

employees. To establish that you had a 

reasonable basis for not treating the workers 

as employees, you can show that:

t You reasonably relied on a court case 

about federal taxes or a ruling issued to 

you by the IRS; or

t Your business was audited by the IRS at 

a time when you treated similar workers 

as independent contractors and the 

IRS did not reclassify those workers 

as employees. You may not rely on 

an audit commenced after December 

31, 1996, unless such audit included 

an examination for employment tax 

purposes of whether the individual 

involved (or any other individual holding 

a substantially similar position) should 

be treated as your employee; or

t You treated the workers as independent 

contractors because you knew, and can 

substantiate, that was how a significant 

segment of your industry treated similar 

workers; or

t You relied on some other reasonable 

basis. For example, you relied on 

the advice of a business lawyer or 

accountant who knew the facts about 

your business.

If you did not have a reasonable basis 

for treating the workers as independent 

contractors, you do not meet the relief

requirements.

The IRS examiner will answer any questions 

you may have about your eligibility for this 

relief.



SECTION 530 RELIEF REQUIREMENTS