U.S. Code » Title 26 » Subtitle Subtitle F— Procedure and Administration › Chapter CHAPTER 76— JUDICIAL PROCEEDINGS › Subchapter Subchapter B— Proceedings by Taxpayers and Third Parties

26 U.S.C. § 7436

Proceedings for determination of employment status

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(a) Creation of remedyIf, 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, § 1454(a), Aug. 5, 1997, 111 Stat. 1055; amended Pub. L. 105–206, title III, § 3103(b)(1), July 22, 1998, 112 Stat. 731; Pub. L. 106–554, § 1(a)(7) [title III, § 314(f)], Dec. 21, 2000, 114 Stat. 2763, 2763A–643.)Editorial NotesReferences 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”.

Statutory Notes and Related SubsidiariesEffective 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, § 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, § 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].”

Notes of Decisions
Cited in 8 cases (3 in the last 5 years), 2001–2024 · leading case: Charlotte's Off. Boutique, Inc. v. Comm'r of Internal Revenue, 425 F.3d 1203 (9th Cir. 2005).
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Charlotte's Off. Boutique, Inc. v. Comm'r of Internal Revenue, 425 F.3d 1203 (9th Cir. 2005). · cites it 6× “In affirming the Tax Court’s opinions, we first consider the jurisdiction issue asserted by both parties, and determine that the Tax Court’s jurisdiction under 26 U.S.C. § 7436 (a) was not limited by the Commissioner’s admission that appellant treated ‘Mrs.”
Raizel Blumberger v. Ian Tilley, 115 F. 4th 1113 (9th Cir. 2024). “, 26 U.S.C. § 7436 (“A decision entered in any proceeding conducted under this subsection shall not be reviewed in any other court .”
Peno Trucking Inc. v. Comm'r Internal Revenue, 296 F. App'x 449 (6th Cir. 2008). “Peno Tracking appealed the Commissioner’s determination pursuant to 26 U.S.C. § 7436 . In that appeal, Peno Trucking argued that the truck drivers in question were independent contractors and not employees.”
Bruecher Found. Servs., Inc. v. United States, 383 F. App'x 381 (5th Cir. 2010). “In December of 2004, the IRS Appeals Office issued a Notice of Determination to BFS reiterating the audit’s findings and apprising BFS of its right to appeal the worker classification determination to the United States Tax Court within 90 days pursuant to 26 U.S.C. § 7436 . BFS…”
Knis v. United States, 10 F. App'x 942 (Fed. Cir. 2001). “Knis's claim for a refund is not attributable to a Tax Court determination in a proceeding under 26 U.S.C. § 7436 , the special limitations period set forth in 26 U.”
Charlotte's Off. Boutique v. Comm'r of Internal Revenue Serv. (9th Cir. 2005). · cites it 6× “In affirming the Tax Court’s opinions, we first consider the jurisdiction issue asserted by both parties, and determine that the Tax Court’s jurisdiction under 26 U.S.C. § 7436 (a) was not limited by the Commissioner’s admission that appellant treated Mrs.”
McBratnie v. Rettig (E.D. Mich. 2023). · cites it 2× “The SS-8 Forms were at issue in the Tax Court litigation where Plaintiff asserted a worker-classification claim under 26 U.S.C. § 7436 . The Tax Court dismissed that claim as beyond its limited jurisdiction.”
Harvey Blake Haddock (Bankr. N.D. Okla 2023). · cites it 2× “”); 26 U.S.C. § 7436 ; Staffmore, LLC v. C.I.”
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