IRS Will Now Allow Taxpayers to E-File Amended Returns Due to COVID-19 By ROBERT HORWITZ and TENZING TUNDEN
For taxpayers heading into the extended tax season there is good news! The IRS will now allow E-filing of amended returns. The IRS published a notice on May 28, 2020 that amended returns for tax years beginning on or after January 1, 2017 can be filed electronically.[i] Previously, amended returns had to be submitted manually through U.S. mail to the IRS for processing.
This is important and helpful for taxpayers because the IRS is facing a significant backlog of mail of approximately 11 million letters and packages. The new electronic option allows the IRS to receive amended returns faster while minimizing errors normally associated with manually completing the form.
IRS Operations During COVID-19
On March 30,2020 the IRS directed all employees to evacuate their workspace and work from home or an alternative location. Since then, the IRS has accumulated millions and millions of unprocessed mail and returns that has built up during the COVID-19 pandemic. As of May 16 , there were 4.7 million tax returns to process and 10 million pieces (now updated to 11 million) of unopened mail.[ii] This backlog does not include the mail that is incoming to the IRS offices. Therefore, taxpayers that do not e-file may face significant delays in obtaining refunds for past tax years.
California Amended Returns
For taxpayers in California, the California Franchise Tax Board has allowed amended returns to be e-filed. This preceded the recent IRS notice. For taxable years beginning on or after January 1, 2017, Schedule X, California Explanation of Amended Return Changes, has replaced Form 540X the amended Individual Income Tax Return. Schedule X and a correct California tax return can be submitted to the Franchise Tax Board electronically.[iii]
A copy of the original tax return is not required to be submitted and may result in a delay in processing the amended California tax return. The taxpayer or accountant should check the box labeled “Check here if this is an amended return” that is located on the corrected form (540, 540 2EZ, 540NR).[iv]
Those seeking to amend their tax returns to take advantage of recent changes in tax law, such as claiming bonus depreciation for qualified improvement property or to increase the business interest deduction, should e-file or else face an extended waiting period to get their refund.
Robert S. Horwitz is a Principal at Hochman Salkin Toscher & Perez P.C., former Chair of the Taxation Section, California Lawyers’ Association, a Fellow of the American College of Tax Counsel, a former Assistant United States Attorney and a former Trial Attorney, United States Department of Justice Tax Division. He represents clients throughout the United States and elsewhere involving federal and state administrative civil tax disputes and tax litigation as well as defending criminal tax investigations and prosecutions. Additional information is available at http://www.taxlitigator.com.
Tenzing Tunden is a Tax Associate at Hochman Salkin Toscher Perez P.C. Mr. Tunden recently graduated from the Graduate Tax Program at NYU School of Law and the J.D. Program at UC Davis School of Law. During law school, Mr. Tunden served as an intern at the Franchise Tax Board Legal Division and at the Tax Division of the U.S. Attorney’s Office (N.D. Cal).
[i] IR-2020-107 available at https://www.irs.gov/newsroom/irs-announces-form-1040-x-electronic-filing-options-coming-this-summer-major-milestone-reached-for-electronic-returns
[ii] Allyson Versprille, Virus Fears, Unopened Mail Await IRS Employees Returning to Work, Bloomberg Tax, June 1, 2020, available at https://news.bloombergtax.com/daily-tax-report/virus-fears-unopened-mail-await-irs-employees-returning-to-work.