§1576.4. Safe harbor

            Any putative employer meeting the requirements provided for in this Section shall not owe withholding tax, interest, or penalties otherwise due for the workers to whom these requirements apply:

            (1) Reporting consistency. The putative employer timely filed all required federal tax and information returns for independent contractors who were paid six hundred dollars or more, such as Form 1099-MISC or Form 1099-NEC. Relief is not available for any worker for whom the employer did not file the required information return.

            (2) Substantive consistency. The putative employer and any predecessor always treated the worker as an independent contractor; however, if any similar worker was treated as an employee, relief is not available.

            (3)(a) Reasonable basis. The putative employer had a reasonable basis for not treating the worker as an employee including any of the following:

            (i) The putative employer relied on a court case or Internal Revenue Service ruling.

            (ii) The putative employer was previously audited and the Internal Revenue Service considered employment taxes but did not reclassify the workers.

            (iii) Independent contractor treatment is common in the putative employer's industry for workers providing similar services.

            (iv) The putative employer and any predecessor always treated the worker as an independent contractor.

            (v) The putative employer relied on legal advice or advice of an accountant.

            (b) Notwithstanding any contrary provision of this Paragraph, if any similar worker was treated as an employee, relief is not available.

            Acts 2022, No. 406, §2.