IRS Announces New Options to Amend Returns, But Taxpayers Need to Be Careful

The Internal Revenue Service (IRS) recently issued a News Release announcing that U.S. taxpayers now have more options to amend their tax returns electronically. But, while amending a tax return is the right decision in some cases, it can be risky in others. As Massachusetts federal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, taxpayers who have provided inaccurate information to the IRS will often need to explore other options.

When Should You File an Amended Return?

Generally speaking, U.S. taxpayers can safely amend their federal income tax returns to address events that occur after the initial filing or that decrease their tax. For example, the IRS explains that taxpayers can use the new electronic amendment procedures, “if there is a change to their filing status or to add a dependent who was previously claimed on another return.” Taxpayers can also use amendments to make certain elections after the election deadline or to claim a loss or unused credit.

When Should You NOT File an Amended Return?

However, simply filing an amended return can be risky if you have previously underreported or underpaid your federal income tax liability. In this scenario, you could be liable for interest and penalties—and filing an amended return could potentially trigger an IRS audit or investigation. As a result, for taxpayers who have recently discovered that they are behind on their federal tax obligations, it is advisable to consult with a Massachusetts federal tax lawyer before simply submitting an amended return online.

Alternatives to Simply Filing an Amended Return

If simply filing an amended return is not your best option, then what is? In virtually all scenarios, it is best to address any tax deficiencies proactively—before the IRS initiates an audit or investigation. Depending on the circumstances at hand, a taxpayer’s alternatives to filing an amended return may include (but are not necessarily limited to):

• Applying for Penalty Relief – If you are behind and owe penalties, you may be able to apply for penalty relief when correcting your returns.
• Submitting an Offer in Compromise – Negotiating an offer in compromise allows you to reduce the amount of your outstanding tax liability while also eliminating the risk of an IRS audit.
• Submitting a Voluntary Disclosure – If you have willfully underreported your federal income tax liability, then you may need to make a voluntary disclosure to mitigate your risk of prosecution for criminal tax fraud.

If you are unable to pay the full amount you owe in connection with an amendment, you have options here as well. These may include submitting an offer in compromise, requesting a payment plan, or seeking “currently not collectible” status. Here, too, to choose the best option for your individual circumstances, you should consult with a Massachusetts federal tax lawyer promptly.

Discuss Your Options with Massachusetts Federal Tax Lawyer Kevin E. Thorn

Are you behind on your federal tax obligations? If so, Massachusetts federal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, can help. Call 617-692-2989, email ket@thornlawgroup.com or contact us online to arrange a confidential consultation.