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Amended Tax Return

A married couple files their tax return. Only after it was koolcarlos03/04/19
personally i say roll the dice. There is no legal authority bobm03/04/19
Um no Legally, you’re respinsible for your tax return, dingbat03/04/19
Of course, that’s the conservative lawyer in me speaking. dingbat03/04/19
Yeah, you can blame a tax preparer in mitigation of penaltie onehell03/07/19
If audited and found to be incorrect they will face interest bobm03/04/19
Bob, is 3 years still the SOL assuming no fraud? guyingorillasuit03/04/19
6 years if there's a gross omission dingbat03/05/19
no expert but that GENERALLY yes either-3 years or 6 years f bobm03/05/19
Key question - how much of a difference in tax did these non caj11103/05/19
koolcarlos (Mar 4, 2019 - 3:30 pm)

A married couple files their tax return. Only after it was already filed, do they see that the accountant/tax preparing "fudged" a few things, including deductions that didn't happen.

It's now been about a year, and only now, that they have the taxes done (by a completely different accountant) do they see that there's a problem.

Should they file an Amended Return? Or should they roll the dice and see if nobody audits them in the next few years?

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bobm (Mar 4, 2019 - 3:58 pm)

personally i say roll the dice. There is no legal authority creating a duty to amend a mistake on a return (as there would be in say a case or administrative proceeding where ethics rules require an attorney to bring to the courts attention a prior mistaken fact.

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dingbat (Mar 4, 2019 - 6:27 pm)

Um no

Legally, you’re respinsible for your tax return, even if prepared by someone else. If they’re audited, they will be in trouble.

Blaming the tax preparer only goes so far. If the prosecutor uncovers that they knew about a false return and did not correct it, they won’t get any leeway

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dingbat (Mar 4, 2019 - 6:28 pm)

Of course, that’s the conservative lawyer in me speaking. If I’m not wearing my lawyer cap, I’d say go fir it. Everyone cheats on their taxes!

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onehell (Mar 7, 2019 - 11:33 am)

Yeah, you can blame a tax preparer in mitigation of penalties and interest on penalties (which is why so many lawyers and tax pros are putting those circular 230 disclaimers on their emails lately), but it's no defense to the underlying tax itself or to the interest on any unpaid taxes.

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bobm (Mar 4, 2019 - 11:16 pm)

If audited and found to be incorrect they will face interest and penalties.

However, unless they assisted in the filing of the false return knowing it was false AT THE TIME of filing or actively covered it up, again, there is no legal authority for a duty to amend and unless you can find some. The crime is willful false filing or willful assisting in false filing or aiding and abetting/misprision of a felony. Butt there is no crime of "failure to correct a mistaken return"

Here is the basic legal analysis (no this is not me: its a guy with a LLM in tax-which I don't have) https://www.aicpastore.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2009/Tax/AmendedReturns.jsp

So I wouldn't worry about prosecution-which is rare even when it is a real crime-such as knowingly false filing.

But if there is an audit yes they will pay more than just the tax in $.

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guyingorillasuit (Mar 4, 2019 - 11:32 pm)

Bob, is 3 years still the SOL assuming no fraud?

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dingbat (Mar 5, 2019 - 12:19 am)

6 years if there's a gross omission

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bobm (Mar 5, 2019 - 12:37 am)

no expert but that GENERALLY yes either-3 years or 6 years from filing (or end of season/extension period if filed before limit) to do audit and asses deficiency. Provided that there is no fraud or MAJOR ERROR (generally defined over 25% of your previously reported income). In the case of a "major error" the limit period is 6 not three years.

Of course a myriad of other exceptions apply; agreement to toll, special adjustments to previously taken tax credits, errors in certain specific types of transactions (particularly foreign ones) etc. etc.

The IRS Sol for audits/assessments after return with all the exceptions is here: https://www.law.cornell.edu/uscode/text/26/6501https://www.law.cornell.edu/uscode/text/26/6501

And yes-of course the BIG exception is an fraudulent (at the time of filing) or missing return-in which case no limit (for an audit) at all of course.

Of course, none of this has anything to do with the SOL on COLLECTION after assessment, which of course is entirely different

and of course, this also has nothing to do with the criminal statute of limitations-(if fraudulent or non filing)-which is generally 6 years from the end of the year of the reporting period including any extensions.

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caj111 (Mar 5, 2019 - 7:23 pm)

Key question - how much of a difference in tax did these non-existent deductions make?

Don't forget about the state return as well, as the state return is often (but not always) affected by errors on the federal return.

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