The Tax Times: Why Filing an Amended Return, After You Are Known to the IRS, Is of No Avail

Tuesday, September 6, 2022

Why Filing an Amended Return, After You Are Known to the IRS, Is of No Avail

According to Law360, a Swiss couple owe accuracy penalties totaling $500,000 for 2006 and 2007 because their amended returns were submitted after a summons, the U.S. Tax Court said on August 31, 2022 in the case of Johannes et ux. v. Commissioner, docket number 14410-15, in the U.S. Tax Court.

Johannes and Linda Lamprecht Filed Their Amended Returns For 2006 And 2007 After The Internal Revenue Service Submitted A John Doe Summons To UBS That Applied To Them, The Tax Court Said.

Thus, their amended returns weren't "qualified amended returns" under Treasury Regulation Section 1.6664-2(c)(3)(i)(D) and the couple were liable for the penalties for understating income.

(3) Qualified amended return defined -

(i) General rule. A qualified amended return is an amended return, or a timely request for an administrative adjustment under section 6227, filed after the due date of the return for the taxable year (determined with regard to extensions of time to file) and before the earliest of - ...

(D)(1) The date on which the IRS serves a summons described in section 7609(f) relating to the tax liability of a person, group, or class that includes the taxpayer (or pass-through entity of which the taxpayer is a partner, shareholder, beneficiary, or holder of a residual interest in a REMIC) with respect to an activity for which the taxpayer claimed any tax benefit on the return directly or indirectly.

(D)(2) The rule in paragraph (c)(3)(i)(D)(1) of this section applies to any return on which the taxpayer claimed a direct or indirect tax benefit from the type of activity that is the subject of the summons, regardless of whether the summons seeks the production of information for the taxable period covered by such return; ...

The Tax Court also found that the IRS had complied with a supervisory approval requirement and that assessing the penalties wasn't barred by a statute of limitations.