Superseding Tax Returns
A superseding tax return corrects errors or omissions on the return that was initially filed. The IRS has certain rules about when and how a superseding return can be submitted.
A superseding return is a complete return that corrects the initial return, and those corrections are, in effect, incorporated into and treated as relating back to and modifying the original return.
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When can a superseding return be filed? – It must be filed on or before the due date of the original return, or on or before the extended due date if a valid extension has been filed. A taxpayer who files a second return filed after the due date (whether original or extended) has filed an amended return (i.e., IRS Form 1040-X, Amended U.S. Individual Income Tax Return).
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When do the assessment and refund clocks begin running for a superseding return? –, First a review of the statutes that limits payments of refunds and assessments:
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Refunds – The statute of limitations on claims for refund is the later of two years from the date of payment or three years from the date of filing (Sec 6511).
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Assessments – The statute of limitations on tax assessments (i.e., the time IRS has for assessing tax) is three years after a return is due or filed, whichever is later (Sec 6511). Of course, there are a number of exceptions allowing the IRS additional time, such as six years where the underpayment is 25% or more and unlimited in the case of fraud.,
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The filing of an amended return has no effect on the assessment or refund statutes.
In June 2020, IRS Chief Counsel released advice (202026002) providing that the original return controlled the statutory periods for assessment and refund. In October 2020, Internal Revenue Manual (IRM) 25.6.1.6.15 – When a Document Is Treated As Filed Under the IRC, was updated to reflect the IRS’s change of position, providing that “neither the ASED (Assessment Statute of Expiration Date) nor the RSED (Refund Statute of Expiration Date) should be reset by the filing of a superseding return during the period of extension to file a return.” So even though a superseding return is considered “the return” for many reasons, it is still viewed as supplementing an already-filed return for purposes of statutes of limitation.
Thus, the first valid return filed after the prescribed due date but before an extended due date controls the period for assessment and timely filed refund claim.
Example- A taxpayer received an extension to file his 2018 tax return until October 15, 2019. On September 20, 2019, he timely files an original return, and then files a timely superseding return on October 15, 2019. Under the Chief Counsel advice and IRM, the original return filed on September 20, 2019, would start both the assessment and refund claims periods, provided the return was valid.
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California Differences
Beginning January 2022, the e-file program will allow Individuals and Fiduciaries to submit “superseding” returns electronically. A superseding return is a return filed subsequent to an originally filed return and filed within the filing period (including extensions).