But\nwhat if you discover an error or omission on a return already filed with the\nIRS that needs to be corrected and it is still before the extended due date? The\nadvantage of fixing the return now, before the due date, is that the\npossibility of accuracy-related penalties associated with the incorrect\ninformation could be eliminated.<\/p>\n\n\n\n
As a summary:<\/p>\n\n\n\n
Amended returns essentially exist along with the original return. Superseding returns, on the other hand, replace an originally filed return.\u00a0 When a superseding tax return is filed, it is as if the original return was never filed. How to file a superseding return is not simple. Every return is different.\u00a0 Some returns have a specific box to check, others require the use of separate amended return forms (such as Form 1040, U.S. Individual Income Tax Return<\/em>, which requires a Form 1040-X,\u00a0Amended U.S. Individual Income Tax Return<\/em>). <\/p>\n\n\n\n The ability to file a superseding tax return is time-limited, but where available it is often the best way to correct a previously filed return.<\/p>\n\n\n\n A taxpayer can file a superseding tax return\nat any time after filing an original return and before the due date for filing\nsuch a return has passed. Thus, a taxpayer whose return is due on July 15, 2020,\nbut who decides to file on May 10, 2020, can file a superseding return anytime\nbetween May 10 and July 15, making any necessary adjustments. The superseding\nreturn will be treated as the taxpayer\u2019s original return for all purposes. Thus,\nif the original return underreported the taxpayer\u2019s tax liability, the\nsuperseding return can correct that underreporting while avoiding the\naccuracy-related penalty normally imposed. This is so even if the taxpayer does\nnot have reasonable cause for the omission, as the superseding return\neffectively removes the omission from the record. <\/p>\n\n\n\n For the purposes of a superseding return, the due\ndate includes any valid extension, for example to October 15, 2020. Therefore,\na taxpayer who files a valid extension but ultimately files the return sometime\nbefore the expiration of the extended filing date will have until that extended\ndue date to file a superseding return.<\/p>\n\n\n\n The benefits of filing a superseding return go\nbeyond the ability to correct errors without risk of an accuracy-related tax\npenalty. Because a superseding return is treated as the taxpayer\u2019s \u201cfirst\nreturn,\u201d it can be utilized to make or change binding elections that would\notherwise not be open to revision. This is perhaps even more valuable than\navoiding penalties, especially for corporate and business filers, where a\nsingle missed election can have devastating consequences that affect future tax\nyears. In fact, court cases and IRS rulings have held that a superseding return\neven allows for the revocation of an election that is otherwise irrevocable.<\/p>\n\n\n\n Superseding returns have other big benefits.\nIf a taxpayer is required to file an information return (such as Form 5471 or\n8938) but fails to do so, a superseding return can be used to rectify the\nerror. If a taxpayer catches the omission of Form 5471 after filing the\noriginal return but before the due date has passed, he or she can file a\nsuperseding return and attach the required Form 5471, making it timely filed.<\/p>\n\n\n\n To make the most of superseding returns, tax advisors should consider filing extensions even for taxpayers who will ultimately file their returns on the original due date. By doing this, such taxpayers will have extra time to catch mistakes and correct them without negative consequences. While it is impractical for tax advisors to do this for all of their clients who file their returns by the original due date, it is a good strategy for some of complex filers. For example, filing an extension may be good practice for a partnership that files Form 1065 and issues K-1s by the original due date. Such a partnership may itself receive amended K-1s from higher-level partnerships after making its original filings, and such revisions may then subject it to filing obligations that it had not previously foreseen. <\/p>\n\n\n\n