Annette Goode-Parker and Marvin Parker married in 1984 after graduating from Howard Law School. After Mr. Parker opened his own practice in 1992 or 1993, the couple faced financial difficulties. Mr. Parker prepared the couple’s 1996 return and reported $18,650 as the couple’s total tax but mistakenly failed to add to that total $9.796 in employment taxes properly reported elsewhere on the return. After the couple later separated and Mrs. Goode-Parker claimed innocent spouse relief. The Tax Court yesterday held that it lacked jurisdiction to review the IRS’s denial of the innocent spouse claim. Goode-Parker v. Commissioner, T.C. Summ. Op. 2007-40 (3/13/07):
This is one of a large number of cases affected first by the Ninth Circuit’s opinion in Commissioner v. Ewing, 439 F.3d 1009 (9th Cir. 2006), revg. 118 T.C. 494 (2002), vacating 122 T.C. 32 (2004), and then by this Court’s opinion in Billings v. Commissioner, 127 T.C. 7 (2006). These cases both held that the Tax Court’s jurisdiction to review the Commissioner’s innocent spouse determinations requires that a deficiency have been asserted against the taxpayer seeking relief. …
The Commissioner argues that the Parkers’ error did not create either an “understatement” or a “deficiency,” and so there can be … no jurisdiction in this Court. Ms. Goode-Parker disagrees — in her view, what she and her husband committed was a simple math error, and math errors can give rise to deficiencies.
Whether there is an “understatement” or “deficiency” thus turns on what tax is “shown” on a return with an error like the one on the Parkers’ 1996 Form 1040. Is the “tax shown” the amount that the Parkers entered on line 51 as their “total tax,” or is it the amount entered in the IRS’s records after the “purple pencil people” noticed that the Parkers’ income tax and self-employment tax, though both shown on the return, had not been added? The Commissioner argues that the tax “shown on the return” was all the tax shown on any line of the return even if not totaled up at the end. If he’s right, there is no deficiency (and no understatement either) because the tax imposed and the tax shown on the return are equal, which makes the difference between the two zero. Ms. Goode-Parker disagrees. She contends that her husband’s mistake created both an understatement and a deficiency because his mistake was a “mathematical error.”
We look to section 6213(g), which lists a number of different errors that are “mathematical or clerical.” The type of error that seems most like the one here is “an error in addition, subtraction, multiplication or division shown on any return.” Sec. 6213(g)(2)(A). But we cannot agree with Ms. Goode-Parker that the mistake on her 1996 return was such an error, because a mistaken failure to add is not the same as “an error in addition.” As we recently explained in Huffman v. Commissioner, 126 T.C. 322, 344-345 (2006), there is a distinction between a “mathematical error” and omitting a step that requires math. A “mathematical error” occurs when someone multiplies when he should have divided or when his computation produces an erroneous result. Id. In this case, Mr. Parker didn’t botch the addition, he just skipped a step that required addition, and under Huffman that is not the same thing. See id. This admittedly very subtle point means that Ms. Goode-Parker’s liability is neither an understatement nor a deficiency, because her return showed all the tax imposed.
