Ask an attorney to review your amended tax return

On Behalf of | Oct 3, 2016 | Back Taxes or Tax Debt

Our tax law firm understands the importance of keeping accounting and legal advice separate. Commingling these two areas might lead to trouble.

For example, errors might be discovered after a tax return has been filed. The accountant who prepared the original tax return may seem like the logical person to remedy those post-filing errors. Yet if the accountant were to file an amended return, the taxpayer may be put at a disadvantage, especially in situations where a substantial amount of income was unreported or deductible expenses were erroneously claimed.

In fact, the amended tax return in the above example might even function as an admission of tax evasion, which Section 7201 of the Internal Revenue Code defines as omitting income from a tax return or claiming deductions that had no basis in fact. Even more trouble with the IRS could arise if the amended return did not correct all of the errors in the original return. Although the IRS sometimes applies an informal policy of not prosecuting taxpayers who voluntarily correct mistakes, the strict letter of the law does not provide such leniency.

The better approach in this example is to consult with a tax attorney. If an attorney reviews a tax return and determines that a forensic analysis is required, the attorney should hire a separate accountant for the task. That way, the attorney-client privilege will be preserved regarding any advice proffered by the attorney.

Our law firm has helped clients facing potential tax penalties in a variety of situations, arising from individual, business and estate tax returns. In each case, we review the circumstances to determine the best strategy for amending a tax return, if necessary. If you discover errors on your tax return, don’t run the risk of unfair penalties or even criminal tax charges. Contact a tax law firm to understand your options.

Source: Accounting Today, “CPAs vs. Lawyers: The dangerous areas where law and accounting overlap,” Roger Russell, Sept. 23, 2016