| Revenue Ruling 2005-51 |
August 1, 2005 |
Mathematical or Clerical Error Summary Assessment Procedures
Mathematical or clerical error summary assessment
procedures. This ruling clarifies whether the mathematical or clerical
error assessment procedures of section 6213(b) of the Code apply when a taxpayer
files an income tax return that reports income in an amount different from
that reported on a W-2.
Whether the mathematical or clerical error summary assessment procedures
of section 6213(b) of the Internal Revenue Code apply when a taxpayer files
an income tax return that reports income in an amount different from that
reported on a Form W-2, Wage and Tax Statement, attached
to the return.
T, a single individual, filed a Form 1040, U.S. Individual
Income Tax Return, for 2003. The return reported wages of $18,000
on the appropriate line. No other income was reported. The only deductions
claimed by T were the standard deduction under section 63 of $4,750 and the
deduction for personal exemption under section 151 of $3,050. The return reported
taxable income of $10,200 and a tax liability of $1,184. T claimed federal
income tax withheld in the amount of $2,000 and a refund due of $816.
T attached to the Form 1040 return a Form W-2, Wage and Tax
Statement, issued by T’s employer. The Form W-2 reported
wages of $25,000 and federal income tax withheld of $2,000. T also attached
a statement saying that he received only $18,000 in wages during 2003, not
the $25,000 reported on the Form W-2. If T’s correct wage income was
the entire $25,000 during 2003, T’s correct income tax liability was
$2,234 and, after taking into account the federal income tax withheld, $234
of tax was unpaid.
T, a single individual, filed a Form 1040, U.S. Individual
Income Tax Return, for 2003. The return reported wages of $50,000
on the appropriate line. No other income was reported. The only deductions
claimed by T were the standard deduction of $4,750 and the deduction for personal
exemption of $3,050. The return reported taxable income of $42,200 and a tax
liability of $7,366. T claimed federal income tax withheld in the amount of
$8,000 and a refund due of $634.
T attached to the return three Forms W-2, Wage and Tax Statement,
issued by T’s employers. The Forms W-2 reported wages totaling $55,000
and federal income tax withheld totaling $8,000. One of the Forms W-2 reported
wages of $5,000 and federal income tax withheld of $500; T did not attach
a statement to the return explaining the discrepancy between the total wages
reported on T’s Form 1040 return and the total wages reported on the
attached Forms W-2. If T’s correct wage income for 2003 was $55,000,
T’s correct income tax liability was $8,616 and, after taking into account
the federal income tax withheld, $616 of tax was unpaid.
Section 6201(a)(1) authorizes the Secretary to assess all taxes determined
by a taxpayer for which a return was made. In both Situation 1 and Situation
2, there is a discrepancy between the amounts reported on the face of the
Form 1040 returns and the amounts reported on the attached Forms W-2. If the
Forms W-2 are correct, the correct tax exceeds the tax shown on the returns,
and there is a deficiency. See I.R.C. § 6211.
If the Secretary determines a deficiency based on the information on the Forms
W-2 and sends a notice of deficiency to T pursuant to section 6212, section
6213(a) prohibits the Secretary from assessing the deficiency until the period
to petition that notice to the Tax Court expires or, if T files a petition,
until the Tax Court’s decision becomes final. The restrictions of section
6213(a) do not apply, however, in the case of mathematical or clerical errors
appearing on the return, when the Secretary may summarily assess the additional
tax due without mailing a notice of deficiency. I.R.C. § 6213(b)(1).
Section 6213(g)(2) defines ”mathematical or clerical error”
by reference to 13 enumerated situations. Those situations include ”an
entry on a return of an item which is inconsistent with another entry of the
same or another item on such return.” I.R.C. § 6213(g)(2)(C).
The Tax Reform Act of 1976, Pub. L. No. 94-455, § 1206, 90 Stat.
1520 (1976) (the Act), clarified the situations in which the Secretary may
use the summary assessment authority of section 6213(b) for mathematical or
clerical errors arising from inconsistencies. The legislative history of the
Act states that the exception for inconsistent entries applies only ”where
it is apparent which of the inconsistent entries is correct and which is incorrect.”
S. Rep. No. 938, 94th Cong., 2d Sess., 376 (1976), 1976-3 (Vol. 3) C.B. 49,
414.
Under the facts described in Situation 1 and Situation 2, it is not
apparent whether the amount reported by the taxpayer on the face of the return
or the amount reported on the Form W-2 is correct. In Situation 1, T’s
attachment explains the discrepancy between the return and the Form W-2, thereby
making clear that T disputes the correctness of the Form W-2. In Situation
2, no attachment or comment explains the discrepancy between the return and
the Forms W-2; while it is possible that T made a mathematical or clerical
error by failing to include information from one of the three attached Forms
W-2, it is also possible that T disputes the information on that form.
In the case of a discrepancy between the income reported by a taxpayer
on an income tax return and the income reported on a Form W-2 attached to
the return, it is not apparent which entry is correct. Therefore, the Internal
Revenue Service may not use the summary assessment procedures of section 6213(b).
Instead, the Service must follow the deficiency procedures prescribed by sections
6212 and 6213(a).
The Service may not use the summary assessment procedures of section
6213(b) if T filed a Form 1040 return reporting an amount of wages and a tax
liability, but attached a Form W-2 reflecting payment of a different amount
of wages. In the circumstances described, the Service must issue a notice
of deficiency under section 6212(a).
The Service may not use the summary assessment procedures of section
6213(b) if the taxpayer filed a Form 1040 return reporting wages from several
Forms W-2 and a tax liability, but also attaches a Form W-2 reflecting payment
of wages that appear not to be reported on the Form 1040 return. In the circumstances
described, the Service must issue a notice of deficiency under section 6212(a)
if it determines a deficiency in T’s income tax for 2003.
The principal author of this revenue ruling is Blaise G. Dusenberry
of the Office of Associate Chief Counsel (Procedure & Administration).
For further information regarding this revenue ruling, contact Blaise G. Dusenberry
at (202) 622-7800 (not a toll-free call).
Internal Revenue Bulletin 2005-31
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