Interpretations of Section 530 by the IRS have been very inconsistent over the years. Many businesses expecting a safe haven have been disenchanted to find the IRS ruling against their claim. It is important to note that states are not bound by this act and often will disregard it. Employer has never treated the individual in question as an employee in the past. Never treated any other workers holding a similar position as an employee.
Employer has reasonable basis for treating the individual in question as an independent contractor.
As a result, the IRS cannot issue new revenue rulings or even modify existing revenue rulings to reflect new legal precedents. At the same time, courts have been able to modify their applications of the common law standard in response to factual developments. As a result, courts may now look at the employee versus independent contractor issue somewhat differently. In many cases outstanding IRS revenue rulings have ignored or found in conflict with recent judicial rulings. Always consult legal counsel to determine if Section 530 applies to your situation.