Section 530: Its History and Application in Light of the Federal Definition of the Employer-Employee Relationship for Federal Tax Purposes

Abstract

This paper presents a brief history of Section 530 of the Revenue Act of 1978, which addresses the Internal Revenue Service (IRS) retroactive reclassification of independent contractors as employees and provides safe harbor for employers from federal employment taxes, penalties and interest associated with the misclassification. The author explores the employer-employee relationship as defined for federal tax purposes and in relation to worker classification policies.