
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 106-554 Section 1(a)(7)[314(f)]]
[CITE: 26USC7436]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                Subtitle F--Procedure and Administration
 
                    CHAPTER 76--JUDICIAL PROCEEDINGS
 
        Subchapter B--Proceedings by Taxpayers and Third Parties
 
Sec. 7436. Proceedings for determination of employment status


(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.

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

                       References in Text

    Section 530 of the Revenue Act of 1978, referred to in subsec. 
(a)(2), is section 530 of Pub. L. 95-600, which is set out as a note 
under section 3401 of this title.


                            Prior Provisions

    A prior section 7436 was renumbered section 7437 of this title.


                               Amendments

    2000--Subsec. (a). Pub. L. 106-554 inserted ``and the proper amount 
of employment tax under such determination'' before period at end of 
first sentence.
    1998--Subsec. (c)(1). Pub. L. 105-206 substituted ``$50,000'' for 
``$10,000''.


                    Effective Date of 2000 Amendment

    Amendment by Pub. L. 106-554 effective as if included in the 
provisions of the Taxpayer Relief Act of 1997, Pub. L. 105-34, to which 
such amendment relates, see section 1(a)(7) [title III, Sec. 314(g)] of 
Pub. L. 106-554, set out as a note under section 56 of this title.


                    Effective Date of 1998 Amendment

    Pub. L. 105-206, title III, Sec. 3103(c), July 22, 1998, 112 Stat. 
731, provided that: ``The amendments made by this section [amending this 
section and sections 7443A and 7463 of this title] shall apply to 
proceedings commenced after the date of the enactment of this Act [July 
22, 1998].''

                  Section Referred to in Other Sections

    This section is referred to in sections 6511, 7421, 7453, 7481 of 
this title.
