RR-2025-3 & RP-2025-10: The definition of employees under section 530 of the Internal Revenue Code

Revenue Ruling 2025-3 addresses the application of Section 530 of the Revenue Act of 1978 (section 530), section 3509 rates, and the requirements to issue a Notice of Employment Tax Determination Under IRC § 7436 (§ 7436 Notice) in several distinct factual situations. Internal Revenue Code section 3509 allows an employer to remit unpaid taxes at reduced rates if an employer fails to deduct and withhold income tax or the employee share of FICA tax with respect to any of its employees because the employer treated that employee as a non-employee.

Revenue Procedure 2025-10 modifies and supersedes Revenue Procedure 85-18, 1985-1 CB 518; it clarifies the provisions of Rev. Proc. 85-18 with respect to the definition of employee, the section 530 requirement for the filing of required returns, and the reasonable basis safe harbor rules. This revenue procedure also amplifies the guidelines set forth in section 3.03 of Rev. Proc. 85-18 (interpreting the word “treat” for purposes of determining whether a taxpayer did not treat an individual as an employee for purposes of section 530(a)). This revenue procedure also includes new provisions that reflect statutory changes made to section 530 since 1986 that added sections 530(d), (e), and (f). Section 530 of the Revenue Act of 1978 (as amended) was enacted to provide relief to taxpayers involved in worker classification disputes with the IRS. Section 530 is not an Internal Revenue Code provision.

Revenue Ruling 2025-3 and Revenue Procedure 2025-10 will be published in Internal Revenue Bulletin 2025-4 on Jan. 21, 2025.

Thank you for subscribing to IRS GuideWire, an IRS e-mail service. If you are a Tax Professional and have a specific concern about your tax situation, call the IRS Practitioner Priority Service 1-866-860-4259.

This message was distributed automatically from the IRS GuideWire mailing list. Please Do Not Reply To This Message.

Update your subscriptions, modify your password or email address, or stop subscriptions at any time on your Subscriber Preferences Page. You will need your email address to log in. If you have questions or problems with the subscription service, visit subscriberhelp.govdelivery.com.

This service is provided to you at no charge by the Internal Revenue Service (IRS).

This email was sent to [email protected] by: Internal Revenue Service (IRS) · Internal Revenue Service · 1111 Constitution Ave. N.W. · Washington, D.C. 20535