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Perfect accuracy or completeness is not necessary to rescue a return from nullity, if it purports to be a return, is sworn to as such [. . . . ] and evinces an honest and genuine endeavor to satisfy the law. This is so even though at the time of filing the omissions or inaccuracies are such as to make amendment necessary.
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But will filing the incomplete, imperfect return before 10/15, followed up by a return reporting several newly acquired rentals preclude the failure to file penalty?
Have the client make a payment that exceeds your best estimate of the final liability. Assuming you get him to pay in a little more than he is going to owe, the late filing penalty is a percentage of nothing and therefore moot
13-Oct-2020 5:43pm
debdoestaxes wrote:But will filing the incomplete, imperfect return before 10/15, followed up by a return reporting several newly acquired rentals preclude the failure to file penalty?
7. While performing services for a taxpayer, a member may become aware of an error in a previously filed return or may become aware that the taxpayer failed to file a required return. The member should advise the taxpayer of the error and the potential consequences, and recommend the measures to be taken. Similarly, when representing the taxpayer before a taxing authority in an administrative proceeding with respect to a return containing an error of which the member is aware, the member should advise the taxpayer to disclose the error to the taxing authority and of the potential consequences of not disclosing the error. Such advice and recommendation may be given orally.
8. It is the taxpayer’s responsibility to decide whether to correct the error. If the taxpayer does not correct an error, a member should consider whether to withdraw from the engagement and whether to continue a professional or employment relationship with the taxpayer. Although recognizing that the taxpayer may not be required by statute to correct an error by filing an amended return, a member should consider whether a taxpayer’s decision not to file an amended return or otherwise correct an error may predict future behavior that might require termination of the relationship.
The Internal Revenue Code does not require a taxpayer to file an amended return to correct a mistake discovered after the filing of the original tax return. The words ‘‘amended return’’ scarcely appear in the code.
Legally, taxpayers are required to accurately compute and report their income, deductions, credits and tax liability on a timely filed return. However, there appears to be no authority in the Internal Revenue Code (IRC), the regulations or case law that imposes a legal duty on a taxpayer to file an amended return to correct an error or omission on a return previously filed. This is true regardless of whether the error omission has resulted in an understatement of tax due or whether the statute of limitations is still open with respect to that year.
13-Oct-2020 5:58pm
10.21 Knowledge of client’s omission.
A practitioner who, having been retained by a client with respect to a matter administered by the Internal Revenue Service, knows that the client has not complied with the revenue laws of the United States or has made an error in or omission from any return, document, affidavit, or other paper which the client submitted or executed under the revenue laws of the United States, must advise the client promptly of the fact of such noncompliance, error, or omission. The practitioner must advise the client of the consequences as provided under the Code and regulations of such noncompliance, error, or omission.
22-Oct-2020 11:50am
22-Oct-2020 1:52pm
Noobie wrote:LW25 - I think there is something to be said about the extent to which the return is incorrect or incomplete when filed. If you are intentionally filing a return that is missing 50% of the taxable income that should be on it, then I don't care what legal terminology you spout out, there is no way that is considered a legally complete -- a legally valid -- return.
I am not saying you file something that egregious, but if you do, (in my opinion) then you are putting your licenses and freedom at risk for clients to get out of a penalty. A penalty which is often incurred due to the client's sheer laziness/procrastination or failure to stay organized.
In my opinion, your interpretation of error is also inaccurate. Error in this instance is meant to mean mistake, not intentional misrepresentation or omission of substantial taxable income.
Just because you haven't been caught, does not mean what you are doing isn't wrong.
23-Oct-2020 8:50am
23-Oct-2020 9:43am
Noobie wrote:Caught filing tax returns with more than 20% of the gross income omitted. Could be considered filing a false or fraudulent return. It extends the statutes of limitations, and I believe pushes the issue over the line from being a monetarily punishment in the form of a penalty into being a possibly criminal infraction of the law and regs. [ . . . ]