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IRS orders FedEx to pay $319 mln
http://www.marketwatch.com/ ^ | December 22, 2007 | Greg Morcroft,

Posted on 12/22/2007 2:49:32 PM PST by lowbridge

FedEx Corp. said late Friday that the Internal Revenue Service has ordered the company to pay back taxes and fines totaling $319 million for ground employees the firm misclassified as independent contractors.

The ruling covers 13,000 employees FedEx had in 2002, and the company said that the IRS is investigating the status of contractors hired between 2004 and 2006. That probe could lead to further penalties, the company said.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: fedex; irs
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1 posted on 12/22/2007 2:49:33 PM PST by lowbridge
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To: lowbridge
I bet FED-EX will use the U.S.P.O. to deliver the moolah. That way they can be assured it will be delivered by Christmas(2008)
2 posted on 12/22/2007 2:52:56 PM PST by shadeaud
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To: lowbridge

Fed-Ex should tell them “MOLON LABE!”


3 posted on 12/22/2007 2:55:13 PM PST by xrp (Ron Paul: The RIGHT way to vote for freedom.)
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To: shadeaud
If they gave it to DHL to deliver DHL would deliver it to the wrong address. Deny that they did. Give an incorrect shipping number (if the IRS could even get ahold of their customer service).
4 posted on 12/22/2007 2:58:04 PM PST by proudofthesouth (Liberalism IS a mental illness.)
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To: lowbridge

Reason #45873459 that the IRS should be abolished. What difference does it make who did what, as long as it was done? Taxing the same job differently for different workers is social-micro-engineering. Only the most arrogant or the most clueless think they know how to create utopia by such engineering. Neither class should be in charge of America.


5 posted on 12/22/2007 3:02:03 PM PST by coloradan (Failing to protect the liberties of your enemies establishes precedents that will reach to yourself.)
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To: proudofthesouth
If they gave it to DHL to deliver DHL would deliver it to the wrong address. Deny that they did. Give an incorrect shipping number (if the IRS could even get ahold of their customer service).

Don't get me started on how crummy DHL's service is. Took them 5 days to deliver a guaranteed 2 day delivery. Cost me a bundle of money.

6 posted on 12/22/2007 3:05:00 PM PST by dearolddad (Opinions are like rectums: everybody has one.)
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To: dearolddad

From the postings that I’ve read at a couple of consumer websites, I don’t understand how DHL is still in business (along with Best Buy, Amazon, Ebay, Circuit City, etc, etc).


7 posted on 12/22/2007 3:09:04 PM PST by proudofthesouth (Liberalism IS a mental illness.)
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To: lowbridge
The IRS makes this kind of check on all "independent contractors". If the contractor has only one customer i.e. FedEx, then FedEx is the contractor's sole employer. FedEx was trying to skirt the social security and benefits burdens by just shipping a 1099 to the contractor. As an employer, you have to be very careful about using "contractors" in that fashion. FedEx got caught.

A similar level of vigilance is required on the part of people who feature themselves as independent contractors, but only work for one customer. The IRS is going to come after you and your customer.

8 posted on 12/22/2007 3:09:41 PM PST by Myrddin
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To: dearolddad

Just tell the IRS those 13,000 employees were chinese dishwashers.


9 posted on 12/22/2007 3:14:04 PM PST by BerryDingle (Illegitimi Non Carborundum (Don't let the bastards wear you down))
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To: proudofthesouth
Amazon ships via a mix of vendors. UPS, Airborne (DHL+USPS) and USPS direct. Barnes & Noble generally sticks with UPS. DHL freight is often handed off to independent contractors in my area. Many of those people are unemployed and perform these deliveries as a means of wringing some cash out of their investment in a car or truck. The airlines employ some of these people to deliver late arriving luggage as well.

I've purchased Russian kettlebells form a supplier down in Texas. He uses UPS exclusively because they will reimburse his losses if they screw up the delivery or lose the package. Not so with FedEx. He stopped using FedEx because they kept losing the packages and not covering the losses. The "independent contractors" didn't have any liability or accountability.

10 posted on 12/22/2007 3:15:42 PM PST by Myrddin
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To: Myrddin
The primary complaint that I’ve read about Amazon has been the lack of and rudeness of their CSR’s.
11 posted on 12/22/2007 3:18:15 PM PST by proudofthesouth (Liberalism IS a mental illness.)
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To: Myrddin
"then FedEx is the contractor's sole employer"

Then why in the hell should this make any difference - other than the fact it is a damn arbitrary law?

12 posted on 12/22/2007 3:22:13 PM PST by RAY (God Bless the USA!)
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To: RAY
Then why in the hell should this make any difference - other than the fact it is a damn arbitrary law?

It's a law written at the behest of labor unions, who live in terror that their employers are going to reclassify them all as independent contractors to avoid paying health benefits and to allow them to stop doing business with the deadwood among their numbers...most of whom are union officers. ;)

It doesn't matter to them that independent contractor status might be a huge advantage to their members, as the most talented among them could command much higher rates.

13 posted on 12/22/2007 3:26:02 PM PST by Mr. Jeeves ("Wise men don't need to debate; men who need to debate are not wise." -- Tao Te Ching)
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To: coloradan
Reason #45873459 that the IRS should be abolished.

How you know there's no such thing as telekinesis: Every April 15, hundreds of thousands of IRS workers do not suddenly die or burst into fire or have their intestines explode.
14 posted on 12/22/2007 3:29:06 PM PST by aruanan
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To: coloradan

It goes beyond that... There are 20 common law factors that are supposed to be used to weigh whether or not a worker is a contractor or employee - case law shows that if the worker meets just 4-5 of the factors, they are found to not be an employee. Of course, the IRS takes the stance that if you meet ANY of the 20, it’s an employee. Of course, States consider otherwise (and rightly so).

Try to justify to a State why a contractor is NOT given a 1099, but a W-2. And try to explain to the IRS why an “employee” is given a 1099 and not a W-2. And try not to get both sides upset at you.

If you’re tagged/audited by the IRS and you have ANY contractors on staff, you best not meet ANY of the 20 criteria or they will consider it willful misrepresentation of classification and immediately hit you for at least twice the taxes that should have been due (income and FICA and SS). And you have to fight to not only show it was NOT willful, but that the worker was in fact a contractor.

I know, it happened to me 3 times in 7 years. Even pointing out to the “revenue officer” (yes, that’s their title) the LAW and the IRS’ own guidelines that it is to be a WEIGHTED evaluation of the 20 factors, I was still found to be committing willful misrepresentation and hit with literally hundreds of thousands of dollars of fines and levies. Which are applied immediately - you know what an IRS levy does to your credit lines?

In each case, after 6 months and tens of thousands of dollars in legal fees to fight them I got the IRS to “forgive” the infraction and accept my classification. Yes, “forgive” me for doing nothing wrong to start. In each time, they even tried to attach my personal assets even though that is clearly illegal (corporate veil).

Just another example of the IRS taking a guilty-until-proven-innocent attitude. And even when PROVEN innocent in a judicial pre-trial review or court they still consider you’re doing something wrong, they just haven’t found it yet... I’m convinced that beating them in the first audit was the reason I got two more in the space of 3 years.

The IRS is one of the largest drags on the economy; I know that much of the offshoring of companies and assets is strictly to avoid their own contradictory and unilateral means of dealing with the tax payer. If the asset is outside their reach, there’s a lot less to worry about...


15 posted on 12/22/2007 3:33:21 PM PST by PugetSoundSoldier (Complaining about the sting of truth is the defense of the indefensible.)
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To: BerryDingle

That’s what they get for trying to work within the law.

If they had just hired illegals they would be getting a subsidy from congress instead of having to pay fines to the IRS.


16 posted on 12/22/2007 3:33:26 PM PST by Iron Munro ( (Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself.))
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To: lowbridge

Can add only one word: FairTax. 

----

Send treats to the troops...
Great because you did it!
www.AnySoldier.com

17 posted on 12/22/2007 3:34:25 PM PST by JCG
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To: lowbridge
I'm sure that the IRS will be refunding the "self employment tax" that those contractors paid, won't they?

Seriously, the IRS has some of the craziest rules when it comes to determining who's an employee VS who's a contractor... There are actually companies who do nothing but "certify" contractors. I know this because a company I worked for had a very hard time with the IRS a while back...

I worked as a full time employee of a company... A large software company wanted me to come on to their site, using their equipment, to teach a 5 day class. So they attempted to hire my company to send me to teach the class. But because I was going to the software company's offices, and using their equipment, I was being classified as an employee of that software company by the certification company. We tried to explain to them that I wasn't being hired, but my company was being contracted to send me. It was a real nightmare, and it involved all sorts of letters, a tax lawyer, and a waiver over a period of about 3 weeks. Eventually things were straightened out and I jetted off to teach the class, but it was a real nightmare.

Mark

18 posted on 12/22/2007 3:35:24 PM PST by MarkL
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To: PugetSoundSoldier

See my #18 post...

Mark


19 posted on 12/22/2007 3:39:42 PM PST by MarkL
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To: JCG

BTTT


20 posted on 12/22/2007 3:40:42 PM PST by Principled (Vaporize the "Divide and Conquer" taxes - Have everyone pay the same marginal rate!. NRST!)
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To: Myrddin

And legally, they should not. Per the IRS’s own publication P15A, there are 20 common law factors, of which sole-customer is just one. The IRS is to consider ALL factors in determining independent contractor or employee status.

Unfortunately, the IRS doesn’t follow its own guidelines and assumes if you meet ANY of the factors you’re an employee. Which is clearly incorrect and illegal.

But you’re right, they’ll come after you anyway and force you to prove otherwise - that you’re not breaking the law. Guilty until proven innocent, in the case of the IRS.


21 posted on 12/22/2007 3:41:39 PM PST by PugetSoundSoldier (Complaining about the sting of truth is the defense of the indefensible.)
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To: Myrddin

Weren’t these the delivery guys from the RPS ground service that Fedex bought from Roadway Freight to jumpstart their Fedex Ground service? The RPS delivery guys were independent contractors.


22 posted on 12/22/2007 3:46:11 PM PST by woofer (Earth First! We'll mine the other eight later.)
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To: lowbridge

Well now at least their shorts are “Brown”.


23 posted on 12/22/2007 3:51:00 PM PST by fish hawk (The religion of Darwinism = Monkey Intellect)
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To: RAY
Then why in the hell should this make any difference - other than the fact it is a damn arbitrary law?

The difference is who pays for the other half of the social security taxes. An employee on a W4/W2 basis has income taxes , social security taxes and medicare taxes extracted and forwarded by the employer on each paycheck period. The employer has to pay a matching amount to the IRS. When an independent contractor is involved, the company sends a 1099 for the gross amount of wages paid to the contractor. That contractor is then responsible for paying income taxes, social security taxes, self employment taxes and medicare taxes. Companies like the contractor model because it saves them the administrative overhead of managing W4/W2 payroll and also lets them off the hook for their half of the social security tax burden. That's fine...unless the "contractor" is really a dedicated employee who works for no other business. That is labeled an attempt to evade the tax responsibilities on the part of the defacto employer.

Every law created by governments is an arbitrary law. You don't get to choose which ones to obey.

24 posted on 12/22/2007 3:55:00 PM PST by Myrddin
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To: proudofthesouth

I thought I was the only one who despised DHL.


25 posted on 12/22/2007 3:56:28 PM PST by BlessedBeGod
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To: PugetSoundSoldier
Guilty until proven innocent, in the case of the IRS.

No kidding. They will even freeze access to your bank accounts before you've had a shot a due process. It's pretty hard to defend yourself when the attacking party is free to seize control of the very assets you require to mount a defense.

26 posted on 12/22/2007 3:57:47 PM PST by Myrddin
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To: woofer
I don't have enough info on the RPS case to make an intelligent comment on that situation.
27 posted on 12/22/2007 3:59:36 PM PST by Myrddin
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To: aruanan
I beg to differ. The average sheep has already gotten his/her “refund” by then, and if they think about the IRS at all, they think it’s a swell savings plan they can go out and use for a new plasma TV. The founding fathers would call us what we are - gutless cowards.
28 posted on 12/22/2007 4:15:04 PM PST by Comus (10%er and proud of it.)
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To: Comus
I beg to differ. The average sheep has already gotten his/her “refund” by then, and if they think about the IRS at all, they think it’s a swell savings plan they can go out and use for a new plasma TV. The founding fathers would call us what we are - gutless cowards.

So their vibes are dampening the truly dangerous ones of a smaller group of people?
29 posted on 12/22/2007 4:17:02 PM PST by aruanan
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To: proudofthesouth

I’d like to think I am one of the nice Amazon CSR’s.


30 posted on 12/22/2007 4:19:51 PM PST by jaredt112
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To: jaredt112
I suggest you do a search go to:

www.my3cents.com
www.theconsumerist.com

and read all the complaints about Amazon. I want to order a couple of things from them but am afraid to after reading all the complaints.

31 posted on 12/22/2007 4:23:34 PM PST by proudofthesouth (Liberalism IS a mental illness.)
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To: Myrddin

How is FedEx the contractors sole customer? Who are all those people they pick up packages from and deliver them to?


32 posted on 12/22/2007 4:26:28 PM PST by purpleraine
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To: Myrddin

PS: I am a real estate bvroker and I am the sole contractor for the associates, by state regulation. Can they be on a 1099 basis?


33 posted on 12/22/2007 4:27:47 PM PST by purpleraine
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To: proudofthesouth
I have ordered CDs,books and DVDs from Amazon through the last 5 years and never had a problem. Fast shipping for me.
34 posted on 12/22/2007 4:28:00 PM PST by 4yearlurker (Thanks Vets!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!)
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To: Myrddin
It is my understanding that any self employed “independent contractor” is legally required to pay his own SS and estimated income tax based on what is reported on the 1099. If this was done, the IRS is trying to get the tax twice.

Does the IRS does not track 1099s?

I suspect the IRS does not want to deal with “independent contractors” due to the extra paperwork.

35 posted on 12/22/2007 4:30:36 PM PST by Western Phil
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To: RAY
Then why in the hell should this make any difference
It's all about withholding.
36 posted on 12/22/2007 4:31:07 PM PST by lewislynn (What does the global warming movement and the Fairtax movement have in common? Disinformation)
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To: coloradan

Taxing the same job differently for different workers is social-micro-engineering. Only the most arrogant or the most clueless think they know how to create utopia by such engineering.
____________________________
Sorry, but classifying ground drivers as “independent contractors” and placing all the business risk upon those drivers PLUS the ‘demand of their time’ driving around in a FedEx truck and wearing a FedEx uniform makes them EMPLOYEES.

FedEx was skirting their employer responsibility by whoring out these people who simply want to fed their families. ESPECIALLY when they have a WHOLE NEW DEPARTMENT that micromanages the mileage and state-by-state fuel purchases of these so-called “independent contractors.”

I think the IRS is out of control, but corporations pimping the poor schmuck who needs to feed his family is even worse.


37 posted on 12/22/2007 4:45:35 PM PST by Dasaji (The U.S.A. is the Land of Opportunity and you've got 50 states to do it in!)
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To: proudofthesouth

Been shopping with Amazon for 10 years and never had any issues. DHL on the other hand...just avoid them when ordering.


38 posted on 12/22/2007 4:46:45 PM PST by packrat35 (Politicians would be less worthless if they were edible, or useable for packing wheel bearings.)
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To: Myrddin
They will even freeze access to your bank accounts before you've had a shot a due process. It's pretty hard to defend yourself when the attacking party is free to seize control of the very assets you require to mount a defense.

And that is precisely the reason that the IRS should be abolished. They have placed themselves above the law and the very constitution itself. Why this is allowed to go on is beyond me.

39 posted on 12/22/2007 4:49:52 PM PST by mc5cents (Show me just what Mohammd brought that was new, and there you will find things only evil and inhuman)
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To: lowbridge
So this is why some eBayer charged me $28 to ship a simple $5 plate from Canada today...
40 posted on 12/22/2007 4:50:02 PM PST by tubebender (Lost another one to the Tag Line bandit...)
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To: proudofthesouth

Meanwhile, CompUSA, which has been good for me, is shutting its doors after the holidays.


41 posted on 12/22/2007 4:58:08 PM PST by Tolerance Sucks Rocks (Tagline auction at this location, 01/01/2008)
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To: RAY
Then why in the hell should this make any difference - other than the fact it is a damn arbitrary law?

Not only the SS and income tax withholding, it can also be a way to avoid obtaining Workers' Compensation insurance and quite likely all or part of the liability insurance bill. This type of thing used to happen a lot in the trucking business but most states have tightened their laws.

42 posted on 12/22/2007 4:59:32 PM PST by DeFault User
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To: lowbridge

Last year I was tracking a Fed Ex ground shipment....and sure enough it arrived on time in Montana. Problem was....I’m in New Jersey.


43 posted on 12/22/2007 5:02:22 PM PST by Focault's Pendulum (Doomage on you)
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To: shadeaud
I bet FED-EX will use the U.S.P.O. to deliver the moolah. That way they can be assured it will be delivered by Christmas(2008)

I have an account with FedEx, print my own labels at home, and drop the packages at any FedEx Kinkos or many Mailboxes etc too. In 5 years of shipping several hundred packages a year via FedEx Ground, they have never once misdelivered or not delivered a package. Insurance up to $100 is included with the shipping charge.

FedEx Ground is significantly less expensive than UPS, plus their workers are non-union as opposed to UPS, which of course is union. And we all know which political party those union dues get donated to ...

44 posted on 12/22/2007 5:16:42 PM PST by webschooner
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To: Myrddin

I think most people understand that the mean old IRS will come after ‘you’ on any number of issues.

But you are missing the point.

Why should the ‘free’ American people put up with this KGB IRS crap???

Read and Heed:

http://www.fairtax.org


45 posted on 12/22/2007 5:18:18 PM PST by Hostage
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To: xrp

Bump for bookmark since I work there.


46 posted on 12/22/2007 5:20:58 PM PST by Nowhere Man (Goofus drops carrier, Gallant logs off properly)
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To: packrat35
Been shopping with Amazon for 10 years and never had any issues.

I've been purchasing from Amazon almost as long, and haven't had any problems. I have returned things a couple of times, and the process was simple and seamless both times. Also, their prices are quite often the lowest on the web or locally as well (I shop diligently for price, once I know what item I want), and if Amazon is shipping it, as opposed to a third party, I usually get free shipping.

47 posted on 12/22/2007 5:21:01 PM PST by webschooner
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To: proudofthesouth

You’ll be glad to hear that Comp USA has finally closed ALL of their stores. :) Good riddance.

Who bankrolls these horrible companies for years on end? Yeesh!


48 posted on 12/22/2007 5:22:55 PM PST by Diana in Wisconsin (Save The Earth. It's The Only Planet With Chocolate.)
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To: woofer
Weren’t these the delivery guys from the RPS ground service that Fedex bought from Roadway Freight to jumpstart their Fedex Ground service? The RPS delivery guys were independent contractors.

Yeah, RPS was that way prior to them being bought out and they became Fed Ex Ground. I'm following this with great interest since I work there. I hope the ruling is challeged, some say if it is, it will be laughed out of court.
49 posted on 12/22/2007 5:26:49 PM PST by Nowhere Man (Goofus drops carrier, Gallant logs off properly)
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To: purpleraine
How is FedEx the contractors sole customer? Who are all those people they pick up packages from and deliver them to?

Did FedEx dictate whether the "contractors" could charge those other people additional delivery charges in the conduct of their "business". An independent contractor would be setting their own rates to charge FedEx, and also whatever they could charge their "other" customers for pickup, storage, transportation, and delivery.

That's what "businesses" do.

If the FedEx contract restricted the "contractor's" ability to charge "other customers" whatever their particular markets would bear, then they were not very "independent".

50 posted on 12/22/2007 5:43:13 PM PST by meadsjn (Hey Spock, round off, partner!)
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