Most people know it’s important when you file your tax return to be diligent and try to be completely accurate.
However, professionals know that even if you make a mistake or two (or 54), you have typically up to three years to file an amended return to clear up any mistakes you may have made. So we often advise people that if you’ve made a mistake, it’s usually no big deal because you can just file an amendment. I’ve even gone so far as to tell people who are considering filing their own return that they should go ahead and do it, but bring it in for a review later because we can file an amendment if they make mistakes.
But this world of having a simple way to make mistakes is coming to an end.
Taxpayers still have the ability to file an amendment. What seems to be changing however, is the ability of the IRS to process these amendments. I suppose it’s not too surprising, considering that many other IRS services are being cut in response to federal budget cuts. But this effect of federal budget cuts doesn’t seem to be making headlines yet.
But here’s what I’m encountering as a prepare who files many amendments. The IRS is becoming incredibly slow at processing amendments…often taking 6 months to a year just to process an amendment and issue a refund the taxpayer is entitled to. That doesn’t concern me too much though, especially since the IRS pays interest for the delay. What’s more alarming is the number of amendments I’m seeing rejected with no explanation.
Several times recently (after waiting on hold for hours to get through to the tax professionals’ “priority” line) I’ve had a conversation like the following:
Me: So what’s the status on the amendment for Mr. X? The online app shows it was processed several months ago.
IRS Agent: Oh, I see here that the amendment was rejected.
Me: Rejected? Why?
IRS Agent: I don’t know, it’s not in the notes. But you should have received a letter of explanation.
Me: Well, we didn’t. How do we find out why the amendment was rejected?
IRS Agent: Well I guess you’ll have to write to the service center where it was processed. Would you like that address?
Me: I have that address. How long will it take to get a response?
IRS Agent: Oh, probably a very long time. They’re really backed up right now.
Me: So…I filed this amendment nearly a year ago. It was rejected with no explanation given. And to even find out why it was rejected will require writing a letter that might take another year to get a response. Is that right?
IRS Agent: Yes, that’s pretty much accurate.
So this is the situation if you’re filing an amendment. If you’re lucky, you’ll get a response in a few months. But if you’re unlucky, it could take a LOT longer. I’ve yet to get as far as a response from a service center from one of these amendments that’s disappeared into the “black hole” of rejection with no explanation.
The days of easily amending returns seem to be over. If you don’t get your return right the first time, don’t be surprised if it takes many, many hours, and possibly thousands of dollars if you use a professional, to get your mistake corrected.
More than ever, it pays to use a professional and get your return right the first time.