Taxing Lessons From Court Decisions

Decisions — Hindsight

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Image source: FDA photo illustration by Michael J. Ermarth, Public domain via Wikimedia Commons
Image source: FDA photo illustration by Michael J. Ermarth, Public domain via Wikimedia Commons

If you make a mistake on your tax return, you should file an amended return within the required time period (Treasury regulation 1.451-1(a)). That seems clear enough.

But is it? How familiar are you with amended returns?

Here’s a short quiz.

1.

Based on the regulation as stated above, would you say you’re required to file an amended return to fix errors you discover after filing your original return?

2.

Which of these is an amended return?

3.

Section 7502 of the internal revenue code says that “any return, claim, statement, or other document required to be filed” is timely filed when it was timely mailed. That means, for example, if you file your document via US Postal Service (properly addressed and stamped) within the filing period, including extensions, the postmark is deemed to be the delivery date.

Based on the definition in question 2, when does this rule apply to amended returns?

***

Sorry, wrong answer :(
Right answer!

According to the tax court, should does not mean “must.” The Supreme Court agreed (Badaracco), saying the regulations do not “require the filing of amended returns.”

Sorry, wrong answer :(

This is a claim for refund. (Internal Revenue Manual 4.90.7.1 (Overview))

Note—An amended return shall constitute a claim for refund or credit if it contains a statement setting forth the amount determined as an overpayment and advising whether such amount shall be refunded to the taxpayer or shall be applied as a credit against the taxpayer’s estimated income tax for the taxable year immediately succeeding the taxable year for which such amended return is filed. (Chief Counsel Memorandum 201052003)

Sorry, wrong answer :(

This is a “superseding” return. (Internal Revenue Manual 3.5.61.1.3 (Definitions)).

A superseding return is generally treated as the taxpayer’s original “return” and the corrections provided in the superseding return are in effect incorporated into, and treated as relating back to, and modifying or superseding the original return.

Right answer!

This is an amended return. (Internal Revenue Manual 4.90.7.1 (Overview))

Sorry, wrong answer :(

Section 7502 applies only to returns “required to be filed.” The treatment of a timely mailed return as timely filed does not apply to timely mailed amended returns that show additional tax due because these returns are not “required to be filed” by any internal revenue laws.

Section 7502 would apply to an amended return that included a claim for refund because taxpayers are required under the internal revenue laws to file a claim in such cases.

Note–The internal revenue code requires these claims to be filed with a statutory time frame, making them “returns required to be filed.”

Right answer!

Section 7502 would apply to an amended return that included a claim for refund because taxpayers are required under the internal revenue laws to file a claim in such cases.

Note–The internal revenue code requires these claims to be filed with a statutory time frame, making them “returns required to be filed.”

Sorry, wrong answer :(

Section 7502 applies only to returns “required to be filed.” The treatment of a timely mailed return as timely filed does not apply to timely mailed amended returns that show additional tax due because these returns are not “required to be filed” by any internal revenue laws.

Section 7502 would apply to an amended return that included a claim for refund because taxpayers are required under the internal revenue laws to file a claim in such cases.

Note–The internal revenue code requires these claims to be filed within a statutory time frame, making them “returns required to be filed.”

Sorry, wrong answer :(

Section 7502 would apply to an amended return that included a claim for refund because taxpayers are required under the internal revenue laws to file a claim in such cases.

Note–The internal revenue code requires these claims to be filed with a statutory time frame, making them “returns required to be filed.”

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