Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 09-17-2013, 04:11 PM
Junior Member
 
Join Date: Sep 2013
Posts: 11
Does IRS audit original returns that were amended?

We amended our LLC tax returns for 2011 and 2012 voluntarily.
IRS didn't issue any notice and we amended voluntarily on the basis of another CPA's review. The main issue with the original LLC return was that our original CPA deducted expenses instead of capitalizing them. The 2nd CPA wanted to be more conservative and not deduct any expenses, which we agreed. Ours is a start up (construction phase) and we haven't opened business yet.

Would IRS review/audit the original returns that were audited?
Since our LLC is based on partnership, there were no tax implications.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 09-17-2013, 04:23 PM
Junior Member
 
Join Date: Sep 2013
Posts: 11
A small typo in my original thread

Would IRS review/audit the original returns that were audited?

Should read

Would IRS review/audit the original returns that were amended?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 09-18-2013, 03:38 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by pcg2011 View Post
We amended our LLC tax returns for 2011 and 2012 voluntarily.
IRS didn't issue any notice and we amended voluntarily on the basis of another CPA's review. The main issue with the original LLC return was that our original CPA deducted expenses instead of capitalizing them. The 2nd CPA wanted to be more conservative and not deduct any expenses, which we agreed. Ours is a start up (construction phase) and we haven't opened business yet.

Would IRS review/audit the original returns that were audited?
Since our LLC is based on partnership, there were no tax implications.

Filing an amended return does not affect the selection process of the original return. However, amended returns also go through a screening process and the amended return may be selected for audit. Filing an amended tax return does not, in and of itself, "red flag" you for an audit. However, the IRS notes that amended returns go through a screening process just like regular returns, which could result in an audit. So, filing an amended return adds an extra layer of IRS scrutiny of your taxes. If you do file an amended return, you can reduce your audit risk by attaching copies of supporting documentation. Providing evidence upfront minimizes the chances of the IRS looking at your return any longer than it has to. SO, basically, filing an amended tax return does not, in and of itself, "red flag" you for an audit; amending a return may increase the audit risk, but probably not as much as you think. It really depends on the items included or excluded in the amended return.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 09-18-2013, 12:54 PM
Junior Member
 
Join Date: Sep 2013
Posts: 11
Quote:
Originally Posted by Wnhough View Post
Filing an amended return does not affect the selection process of the original return. However, amended returns also go through a screening process and the amended return may be selected for audit. Filing an amended tax return does not, in and of itself, "red flag" you for an audit. However, the IRS notes that amended returns go through a screening process just like regular returns, which could result in an audit. So, filing an amended return adds an extra layer of IRS scrutiny of your taxes. If you do file an amended return, you can reduce your audit risk by attaching copies of supporting documentation. Providing evidence upfront minimizes the chances of the IRS looking at your return any longer than it has to. SO, basically, filing an amended tax return does not, in and of itself, "red flag" you for an audit; amending a return may increase the audit risk, but probably not as much as you think. It really depends on the items included or excluded in the amended return.
Thanks for the detailed update.
My question was regarding the review of the original returns. I am not concerned about the audit/review of the amended returns since our CPA took a very conservative approach. But the original returns prepared by a different CPA was more aggressive. Can we assume that IRS will always review the latest amended return and not the original return since the original return anyway has errors (which is why it was amended)? Even if IRS audited original return and found errors which were already fixed in our amended return, what action can they take?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #5 (permalink)  
Old 09-18-2013, 03:49 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by pcg2011 View Post
But the original returns prepared by a different CPA was more aggressive. Can we assume that IRS will always review the latest amended return and not the original return since the original return anyway has errors (which is why it was amended)? Even if IRS audited original return and found errors which were already fixed in our amended return, what action can they take?
Correct.As far as I know, filing an amended return does NOT affect the selection process of the original return. However, as mentioned previously, amended returns also go through a screening process and the amended return may be selected for audit. Amending a return may increase the audit risk, but probably not as much as you think. It really depends on the items included or excluded in the amended return.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Advice on amended tax returns ddss Income 20 09-30-2013 05:39 PM
What is the overall IRS Audit Rate for Individual Tax Returns in 2010? MikeCPA Miscellaneous 1 05-21-2011 11:48 AM
Ten Facts about Amended Returns Samatg For 2009 0 04-13-2010 11:46 PM
Top Ten Facts about Amended Returns Samatg General 0 04-14-2009 08:30 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.