Under §530 of the Revenue Act of 1978 ("§530 safe harbor"), a contractor may continue treating workers as independent contractors for federal employment-tax purposes only if which of the following is true?

Explanation

Section 530 relief needs all three prongs together: a reasonable basis for treating the workers as contractors, such as judicial precedent, a prior audit or long-standing industry practice; substantive consistency, meaning the firm has never treated these or substantially similar workers as employees; and reporting consistency, meaning every required Form 1099 was actually filed. A pay threshold is not one of them, and the 1099-NEC threshold is $2,000 for tax year 2026 in any case. Workers cannot waive employee status by signing. And using a payroll service describes the mechanics of payment, not the basis for classification.