Staffmore, LLC v. Comm'r

JACOBS, Judge: Petitioner comes before this Court requesting that we (1) review respondent's determination of employment status (employee or independent contractor) with respect to SH,¹ one of petitioner's workers during *188 2009 and 2010, and (2) restrain respondent from making his determination available for public inspection until this case is concluded. Respondent has filed a motion to dismiss for lack of jurisdiction, as supplemented (respondent's motion). Respondent asserts that this Court does not have jurisdiction to review respondent's determination of SH's employment classification. Additionally, respondent asserts that this Court lacks jurisdiction under section 6110(f)(3) to restrain public disclosure of the redacted version of a Form SS-8 letter informing petitioner of respondent's determination as to the employment classification of SH.

All section *196 references are to the Internal Revenue Code in effect for the years at issue.

The following undisputed facts are established by the pleadings and the exhibits attached thereto. At the time the petition was filed, petitioner's principal place of business was in Pennsylvania. Petitioner, a single-member limited liability company, was a staffing agency that contracted with mental and behavioral health providers (clients) to provide them with clinical and nonclinical *189 staff persons. The staff persons provided services to the clients under the supervision of the clients' respective case managers.

On November 3, 2011, petitioner filed a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, requesting a determination as to the employment status of SH. Petitioner had been treating SH as an independent contractor. On March 29, 2012, respondent responded to that request (Form SS-8 letter), determining that SH was petitioner's employee. The Form SS-8 letter stated:

This determination is based on the application of law to the information presented to us and/or discovered by us during the course of our investigation; however, we are *197 not in a position to personally judge the validity of the information submitted. This ruling pertains to all workers performing services under the same or similar circumstances. It is binding on the taxpayer to whom it is addressed; however, section 6110(k)(3) of the Code provides it may not be used or cited as precedent.

Internal Revenue Code section 7436 concerns reclassifications of worker status that occur during IRS examinations. As this determination is not related to an IRS audit, it does not constitute a notice of determination under the provisions of section 7436, nor is this an audit for purposes of entitling you to section 530 relief (further explained below) if you are not otherwise eligible for such relief.²

*190 Attached to the Form SS-8 letter was a Notice Number 441, Notice—We Are Going To Make Your Determination Letter Available for Public Inspection (public disclosure notice). The public disclosure notice stated that a redacted copy of the Form SS-8 letter would be made available for public inspection at the Internal Revenue Service (IRS) Electronic Reading Room on *198 the IRS.gov Web site. Attached to the public disclosure notice was a draft of the redacted Form SS-8 letter. Petitioner was informed:

When you disagree with the redacted copy, you can request more deletions by returning the copy to us (at the address shown on this notice) with the information you want deleted enclosed within brackets. We can delete only the information that relates to one of the categories that we listed in the above section entitled Deletions We May Have Made to Your Original Determination Letter. Please also include a statement that specifies which category applies to each deletion you've requested.The public disclosure notice stated that petitioner could request a delay in availability for public inspection of up to 90 days or, if there was an ongoing transaction related to the determination, a delay of up to 15 days after the completion of the transaction, whichever was earlier. Petitioner could request a second delay for good cause of 180 days, or if there was an ongoing transaction related to the determination, a delay of 15 days after the completion of the *191 transaction. This second request was required to be sent to the IRS no later than 30 days before the end *199 of the original delay period.

The public disclosure notice stated that the Form SS-8 letter would be open to public inspection on June 22, 2012. The last date to request the IRS to review any additional redactions to the Form SS-8 letter was April 18, 2012; the last date to request a delay in releasing the Form SS-8 letter was May 28, 2012; and the last date to petition the Tax Court with respect to any disputed redactions was May 28, 2012.

On April 19, 2012, petitioner's attorney, John A. Torrente, mailed a letter to respondent objecting to respondent's employment status determination and stating: "We are requesting that this redacted determination letter be deleted and not published at all during the review and appeal period as we plan to petition the Tax Court on both issues. It is our understanding that the release of this letter is prohibited pending reconsideration and appeal of the SS-8 determination."

On May 23, 2012, petitioner filed a petition with this Court. In its petition, petitioner asks the Court to (1) review respondent's determination that SH was petitioner's employee; and (2) prevent the publication of respondent's determination in any form "pending the instant appeal."

*192 *200 On May 27, 2012, Mr. Torrente mailed a followup letter to respondent, stating that his office "has filed an appeal with the United States Tax Court on May 22, 2012. In light of the above, we are requesting and please allow this correspondence to confirm a delay in publication of the March 29, 2012 Notice of Determination in its entirety, issued to Staffmore, LLC until a final decision is issued by the United States Tax Court."

This Court may exercise jurisdiction only to the extent authorized by Congress. Huff v. Commissioner, 135 T.C. 222, 229 (2010). However, we have the authority to determine whether we have jurisdiction over a particular case. Kluger v. Commissioner, 83 T.C. 309, 314-315 (1984). Jurisdiction must be shown affirmatively, and petitioner, as the party invoking the jurisdiction of this Court, bears the burden of proving that we have jurisdiction over its case. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff'd, 22 Fed. Appx. 837 (9th Cir. 2001).

In respondent's motion, respondent first asserts that we lack jurisdiction to review respondent's determination that SH was an employee of petitioner. Section 7436 governs proceedings in *201 this Court for determining employment status. Section 7436(a) provides:

*193 SEC. 7436(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—