What Is a Qualified Amended Tax Return? How It Can Help Address Tax Underpayments and Penalties

A Qualified Amended Return may provide taxpayers with an option to address an inaccurate tax return and potentially reduce or eliminate certain accuracy-related penalties. According to Rosefelt Tax Law, the Internal Revenue Code imposes a 20% penalty on underpayments resulting from negligence, substantial understatement of income tax, substantial valuation misstatement, and certain other inaccuracies. The I.R.C. also provides for a 75% civil fraud penalty for underpayments attributable to fraud.

Rosefelt Tax Law explains that when a taxpayer files a Qualified Amended Return, the tax reported on the amended return is treated as though it had been reported on the original return. As a result, typically no underpayment exists for purposes of calculating the accuracy-related penalty once the qualified amended return is accepted and processed.

Under IRS regulations, a Qualified Amended Return must generally be filed after the original return’s due date and before certain IRS examinations, investigations, summonses, or settlement initiatives occur. 

A Qualified Amended Return does not protect taxpayers when an inaccurate return resulted from fraud or criminal misconduct. In those circumstances, Rosefelt Tax Law states that taxpayers could consider the IRS Voluntary Disclosure Program, if applicable to their specific circumstances. The firm’s attorneys and CPAs can help taxpayers evaluate their legal options and start on their path to resolution and relief.