Definition:
A safe harbor is a provision of Internal Revenue code that eliminates or reduces a taxpayer's liability under the law, on the condition that the taxpayer acted in good faith.
Safe harbor rules are contained in many different Internal Revenue Code sections. One particular section that will be of interest to arts/crafts business owners is Section 530 which covers proper classification of workers.
Section 530 prevents the Internal Revenue Service from reclassifying workers if the employer has reasonable bases for treating the worker as an independent contractor. One of the acceptable reasonable bases is that classification of the worker is done as a long-standing practice of a significant segment of the industry.
