In their pretrial memorandum the Martins assert that respondent was incorrect in determining that Mr. Martin was an employee of the corporation and that many of the disbursements respondent considers wages are "deductible expense reimbursements, deductible basis in Capital transactions, or otherwise deductible items".

B. The Corporation's Position

The petition Mr. 2009 Tax Ct. Memo LEXIS 236">*242 Clark drafted and filed in the corporation's case is substantially identical to that filed in the Martins' case except that it also asserts that the "IRS should also account for the appropriate accruals of payroll tax liability." In its pretrial memorandum the corporation asserts that respondent's reclassification of Mr. Martin as its employee -- 7 subjects it to liability for payroll taxes for both the employer's and employee's portions, and:

if IRS wishes to accrue payroll liability to David Martin Inc. for the periods in question it must also accrue the accompanying payroll tax expense to David Martin, Inc. * * *

* * * Proper inclusion will correctly eliminate any Corporate tax obligation to the Petitioner and support IRS' claim for increased Payroll taxes in the U.S. Court of Federal Claims.

Except for the corporation's claim that it is entitled to deduct the payroll taxes the examination officer determined it was obligated to pay, the Martins and the corporation have not identified, specified an amount of, or provided any substantiation for any additional deductions to which they might be entitled for the years at issue.

Neither petitioners nor respondent have taken the position that 2009 Tax Ct. Memo LEXIS 236">*243 Mr. Martin was an independent contractor or employee of RE/MAX or that all income paid by RE/MAX is his and not the corporation's. Cf. Leavell v. Commissioner, 104 T.C. 140">104 T.C. 140, 104 T.C. 140">149, 104 T.C. 140">159 (1995).

Petitioners each received a notice of deficiency, and they invoked our jurisdiction by filing petitions for redetermination of a deficiency under section 6213(a). Section 6214(a) grants us jurisdiction to redetermine the correct amount of a deficiency and to determine whether any additional amounts or any additions to tax should be assessed. ^{32009 Tax Ct. Memo LEXIS 236">*244}

Pursuant to section 7436, the Tax Court has jurisdiction to review certain determinations made by the Commissioner regarding worker classification and the proper amount of employment tax under such determinations. ⁴Charlotte's Office Boutique, Inc. v. Commissioner, 121 T.C. 89">121 T.C. 89, 121 T.C. 89">102-103 (2003), affd. 425 F.3d 1203">425 F.3d 1203 (9th Cir. 2005); Ewens & Miller, Inc. v. Commissioner, 117 T.C. 263">117 T.C. 263, 117 T.C. 263">267-268 (2001). However, our jurisdiction under section 7436(a) depends upon, and arises only after, a determination of worker classification by the Secretary. 121 T.C. 89">Charlotte's Office Boutique, Inc. v. Commissioner, supra at 103. Respondent has not made such a determination, and therefore we do not have original jurisdiction under section 7436 over petitioners' claims that Mr. Martin was not an employee 2009 Tax Ct. Memo LEXIS 236">*245 of the corporation for employment tax purposes.

However, in a deficiency proceeding such as this, where the existence and amount of the deficiency depends on whether the taxpayer is classified as an employee or an independent contractor, we have jurisdiction to decide the proper status. See, e.g., Butts v. Commissioner, 49 F.3d 713">49 F.3d 713 (11th Cir. 1995) (Tax Court properly held taxpayers were independent contractors rather than employees of insurance company), affg. T.C. Memo 1993-478, T.C. Memo 66-1041 and Smithwick v. Commissioner, T.C. Memo. 1993-582; Anderson v. Commissioner, 123 T.C. 219">123 T.C. 219, 123 T.C. 219">223 (2004) (taxpayer was self-employed under section 3121(b)(20) when he worked as a captain or crew member of the fishing boats), affd. 137 Fed. Appx. 373">137 Fed. Appx. 373 (1st Cir. 2005); Weber v. Commissioner, 103 T.C. 378">103 T.C. 378, 103 T.C. 378">394 (1994) (minister was employee, not an independent 2009 Tax Ct. Memo LEXIS 236">*246 contractor, and his business expenses were not properly reported on Schedule C but were allowable as miscellaneous itemized deductions on Schedule A, Itemized Deductions, subject to the 2-percent floor), affd. 60 F.3d 1104">60 F.3d 1104 (4th Cir. 1995).

Similarly, where the existence and amount of an employer-taxpayer's deficiency depends on the taxpayer's deduction for employment taxes, this Court has jurisdiction to decide whether the employer is entitled to a deduction and, if so, the amount of the deduction.

D. Mr. Martin's Employment Status

Sections 3111 and 3301 impose FICA (Social Security) and FUTA (unemployment) taxes on employers for wages paid to their employees. For Federal employment tax purposes, section 3121(d) defines an employee in part as any officer of a corporation. However, there is an exception to employee status for an officer who does not perform any services (or performs only minor services) and who neither receives nor is entitled to receive remuneration. Sec. 31.3121(d)-1(b), Employment Tax Regs. For Federal employment tax purposes, the term "wages" is defined as "all remuneration for employment". Secs. 3121(a), 3306(b). The form of payment is immaterial, the only relevant 2009 Tax Ct. Memo LEXIS 236">*247 factor being whether the payments were actually received as compensation for employment. Secs. 31.3121(a)-1(b), 31.3306(b)-1(b), Employment Tax Regs. Consequently, an officer who performs substantial services for a corporation and who receives remuneration in any form for those services is considered an employee, whose wages are subject to Federal employment taxes. Veterinary Surgical Consultants, P.C. v. Commissioner, 1l7 T.C. 141">7 T.C. 141, 7 T.C. 141">144-145 (2001), affd. sub nom. Yeagle Drywall Co. v. Commissioner, 54 Fed. Appx. 100">54 Fed. Appx. 100 (3d Cir. 2002).

Mr. Martin is an officer of the corporation, and therefore he is an employee of the corporation under the general rule of section 3121(d)(1). Additionally, Mr. Martin performed substantial services for the corporation. Indeed, he was the only individual working for the corporation, and the corporation's income was generated from the real estate sales services Mr. Martin provided. Therefore, we hold that Mr. Martin was an employee of the corporation.

E. Additional Deductions

Mr. Martin testified that he kept business records and receipts, which he presented to the examination officer during the audit. He asserted that some of the expenses the corporation paid 2009 Tax Ct. Memo LEXIS 236">*248 that respondent treated as his wages were in fact expenses of the corporation. Mr. Martin alluded to a cashier's check paid to a title company but did not state the amount of the check or provide any facts regarding the transaction.

Except for the payroll taxes the examination officer determined the corporation was obligated to pay, the Martins and the corporation have not identified, specified an amount, or provided any substantiation for any additional deductions to which they might be entitled for the years at issue. Except for the corporation's assertion that it is entitled to an additional deduction for the payroll taxes, petitioners have failed to identify or substantiate any errors in the deficiencies respondent determined in the notices of deficiency.

A contested tax liability is not deductible because it has not accrued. Dixie Pine Prods. Co. v. Commissioner, 320 U.S. 516">320 U.S. 516, 64 S. Ct. 364">64 S. Ct. 364, 88 L. Ed. 270">88 L. Ed. 270, 1944 C.B. 509">1944 C.B. 509 (1944); Metro Leasing & Dev. Corp. v. Commissioner, 119 T.C. 8">119 T.C. 8, 119 T.C. 8">16 (2002), affd. 376 F.3d 1015">376 F.3d 1015 (9th Cir. 2004); Doug-Long, Inc. v. Commissioner, 73 T.C. 71">73 T.C. 71 (1979). Section 1.461-2(b)(2), Income Tax Regs., defines a "contest" as:

A contest arises when there is a bona fide dispute as to the proper evaluation of 2009 Tax Ct. Memo LEXIS 236">*249 the law or the facts necessary to determine the existence or correctness of the amount of an asserted liability. It is not necessary to institute suit in a court of law in order to contest an asserted liability. An affirmative act denying the validity or accuracy, or both, of an asserted liability to the person who is asserting such liability, such as including a written protest with payment of the asserted liability, is sufficient to commence a contest. Thus, lodging a protest in accordance with local law is sufficient to contest an asserted liability for taxes. * * *

Thus, the employment tax disputed by the corporation is a "contested tax". See 320 U.S. 516">Dixie Pine Prods. Co. v. Commissioner, supra; 73 T.C. 71">Doug-Long, Inc. v. Commissioner, supra at 79 (citing Great Island Holding Corp. v. Commissioner, 5 T.C. 150">5 T.C. 150 (1945) (a liability is not fixed if a taxpayer disputes such liability). Section 461(f) provides that, under specified circumstances not applicable in this case, a contested liability can be deducted. ⁵ Unless an accrual method taxpayer satisfies the conditions of section 461(f), he generally may not claim a deduction for a contested tax liability before the year the contest is ended by compromise 2009 Tax Ct. Memo LEXIS 236">*250 or settlement or through a final disposition. Wadsworth v. Commissioner, T.C. Memo. 2008-171.

The corporation has contested the employment taxes. Therefore, they did not accrue in the year the wages were paid to Mr. Martin, and the corporation may not deduct them for its tax year here in issue.

F. Reliance on Advice of Return Preparer

Petitioners relied on Mr. Clark in reporting their income, expenses, 2009 Tax Ct. Memo LEXIS 236">*251 and taxes on their Federal income tax returns. When respondent's counsel asked Mr. Martin whether he blindly followed Mr. Clark's advice without understanding the ramifications, Mr. Martin responded:

Well, the way that I looked at it is, you know, it's kind of like a doctor or a physician. You know, I certainly don't go to the doctor and tell him what I'm going to do. I certainly heed his advice, if I have confidence in him or her, you know, because that's what they do -- that's their profession, and I have a great physician and I do exactly everything that she tells me to do because my health is important to me.

I met Mr. Clark years ago. He was somebody that I felt like I trusted, somebody that I felt like I could have confidence in, and even after today, no matter what happens here today, unless something dramatically changes, if he gives me advice that I feel is good advice, I'm going to take his advice in that venture, because that's out of my area, that's out of my league and my dad kind of taught me if you don't know anything about it, then don't do it, just stay with what you know, so --

Unfortunately, Mr. Martin's confidence in Mr. Clark appears to have been misplaced. Mr. Clark 2009 Tax Ct. Memo LEXIS 236">*252 testified that he is not an attorney, an accountant, or an enrolled agent. His 6-year employment with the IRS, primarily matching Forms W-2 and 1099 with the individuals' returns, does not necessarily qualify him to prepare tax returns let alone advise clients regarding business planning, business accounting, or various complicated problems involving Federal taxation.

Mr. Clark testified that he advised Mr. Martin to incorporate his real estate sales business, actually set up the corporation, set up the bookkeeping procedures, and prepared the corporation's and the Martins' Federal income tax returns. He knew that Mr. Martin was an officer of the corporation who provided substantial services for the corporation. RE/MAX clearly considered Mr. Martin to be its agent entitled to commissions on his sales and issued annual Forms 1099 to him. Mr. Clark knew this, and yet he advised Mr. Martin to deposit the commission checks into the corporation's bank account and to treat the income as income of the corporation. Cf. Leavell v. Commissioner, 104 T.C. 140">104 T.C. 140 (1995). He knew that the corporation paid Mr. Martin's business expenses as well as some of the Martins' personal expenses. He apparently 2009 Tax Ct. Memo LEXIS 236">*253 did not report any of those payments as either wages reportable on Form W-2 or commissions reportable on Form 1099. He did not know that an officer of a corporation who performs services for the corporation is an employee of the corporation for employment tax purposes.

Mr. Martin obtained no tax benefit by incorporating his business. Instead of Mr. Martin's paying self-employment tax on his commission income and claiming a deduction for half the tax, the corporation pays and deducts the employer's portion (half) of the employment taxes. The other half is withheld from Mr. Martin's wages, and he does not get a tax deduction for his portion of the taxes. Additionally, when Mr. Clark set up the recordkeeping procedures, he did not create an accountable plan for reimbursement of Mr. Martin's employee expenses or advise Mr. Martin to do so. Consequently, the corporation's payment of those expenses is included in computing Mr. Martin's wages, and he must deduct them on Schedule A (subject to the 2-percent floor) rather than Schedule C.

During the audit Mr. Clark advised Mr. Martin to appeal the issue of Mr. Martin's status as an employee to respondent's Appeals Office, thereby precluding the 2009 Tax Ct. Memo LEXIS 236">*254 corporation from deducting the employment taxes in the year the wages were paid.

Mr. Clark prepared the unusually obscure petitions filed in these cases. During the trial Mr. Martin relied almost entirely on Mr. Clark's testimony to explain petitioners' positions in their cases. That testimony for the most part is void of relevant content.

We note that other corporate and individual clients of Mr. Clark similarly relied on him in presenting their cases to the Court during the same trial session as these cases. See, e.g., Rosemann v. Commissioner, T.C. Memo. 2009-185; Rosser v. Commissioner, docket No. 6540-08; Rosser Enters., Inc. v. Commissioner, docket No. 6541-08.

G. Conclusion

Mr. Martin is an employee of the corporation and the payments made to him are wages, the corporation may not deduct the employment taxes until the contest has been resolved, and petitioners have failed to identify or substantiate any deductions not allowed by respondent.

To reflect the foregoing,

Decisions will be entered for respondent.