The IRS Chief Counsel’s Office recently issued a Memorandum explaining that for an amended tax return mailed just before expiration of the statute of limitations the U.S. postmark will be accepted as the date of mailing only if the amended return reflects an overpayment. If the amended return reflects a balance due, however, the date of receipt by IRS will determine whether the amended return was filed before expiration of the statute of limitations period for assessment of addtional tax. The reason for the difference in treatment is that no provision in the tax code requires the filing of an amended return. Code Section 7502(a)(1) states that the U.S. postmark is considered as the date of mailing for “any return, claim, statement, or other document required to be filed.” The Chief Counsel opines that an amended return is not required to be filed and therefore the U.S. postmark presumption does not apply. On the other hand, an amended return showing an overpayment is a deemed to be a claim for refund required to be filed to request a refund of tax. Hence, the U.S. postmark is the controlling mailing date.
The amended return discussed in the Chief Counsel’s Memorandum contained adjustements both increasing taxable income and decreasing taxable income, but the net effect was addtional tax due. The Chief Counsel opined that the commissioner could not assess any additional tax becaue it is impermissible to bifurcate the adjustments on the amended return.
This opinion seemingly benefited the taxpayer although it is not stated why the amended return was filed or what were the specific adjustments.
Importantly, this opinion focuses attention on an anciallary point of law that is critical to understand from a criminal tax law perspective. A taxpayer is not obligated to file an amended return. Not filing an amended return results in no addtional crime. If the original return contains a falsity that error is either a crime or not at the time of filing. What is importnat for CPAs to understand about an amended return? Filing an amended return is an admission of at least one of the elements of almost every major tax crime. Therefore, a criminal tax lawyer should be involved in the decision to file an amended return in many instances that do not involve a simple error or miscalculation or where the size of the omission or erroneous deduction raises eyebrows about whether the omission or error was intentional and not merely negligent.