It’s an old gibe, one I’ve often repeated here, that lawyers can’t add. Well, today STJ Diana L (“The Taxpayer’s Friend”) Leyden seems to evince doubts that IRS correctly toted up the salary and wages of Cong T. Phan & Tien Thai, Docket No. 9989-19SL, filed 10/7/20.

Cong & Tien were nailers, working for various salons, which gave Cong & Tien 1099-MISCs for the year at issue. Cong & Tien, notwithstanding their limited English proficiency, dropped “…Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS claiming that they were employee’s [sic; should be “employees”] not independent contractors for the period March 2014 to November 2014 of Spa Nails, the business that had issued the Forms 1099-MISC. By letter dated May 9, 2016, the IRS agreed with petitioners and informed them that they were employees and that they must pay Federal income tax and their share of Federal Insurance Contribution Act (FICA) tax on the income they received because the employer had not withheld and paid such taxes. The letter does not indicate what amount of income was considered as wages paid to petitioners as employees and did not provide any appeal rights for petitioners to challenge the amount of income that Spa Nails had reported as paid to petitioners.” Order, at p. 3.

Now begins the fun. IRS thinks Cong & Tien are contesting liability. Cong & Tien only want to find out how IRS got the number for FICA/FUTA they want Cong & Tien to pay.

I’ll spare you a recitation of STJ Di’s slog through IRS’ and Appeals’ various numbers, no two of which agree.

IRS wants summary J sustaining the NITL. They don’t get it.

“Respondent is incorrect that the statutory notice of deficiency provided petitioners with the opportunity to dispute the calculation of their Federal income tax and Social Security and Medicare taxes that the IRS calculated as a result of agreeing with petitioners that they should have been classified as employees of Spa Nails. Instead, the record does not indicate that petitioners were issued another statutory notice of deficiency after they were reclassified as employees or that they were otherwise given an opportunity to dispute the new calculation of their taxes, including Medicare and Social Security taxes, and the SO did not verify the calculation or allow petitioners an opportunity to dispute the calculation.” Order, at pp. 7-8.

Remand to Appeals to sort out the numbers.