Amended Return

[barzillai]

A client for whom I prepared 2007 return told me about student loan interest they had not previously told me about. Now she wants to file an amended return. I am willing to do it at no charge (it won't take five minutes), but all they will receive is about fifteen dollars. My questions are these: Would the IRS view this as frivolous? Should I try to talk her out of filing or just let her go ahead?

I am wondering if there might be some kind punitive actions taken over filing an amended return for such a small amount. Even though I am confident the return would hold up to an audit, I don't want to expose the client to any unnecessary headaches.

Any thoughts or experience would be appreciated.

Thanks!

[JG EA]

I did an amended return for a client once to get $5 back. He really wanted to. And I did another one for someone so upset that they didn't report $8 in interest that he really wanted to amend. I think as long as it makes a difference in the tax then it is OK to amend.

[erchess]

I don't think the IRS will get mad

Rest assured that when the IRS talks about frivolous returns they are talking about the frivilous positions on tax law being taken and not on the small refunds being asked for on amended returns.

I think they will check your math and a computer and perhaps a person will read your explanation and unless you make a mistake somehow such as by writing a poor explanation then she will most likely get her money in due time.

Depending on her situation she may or may not be audited but if she is it won't be in retaliation for this Amend.

[Koss]

Not Frivolous

A frivolous return is one which takes an unrealistic position in terms of the tax law.

And yes, there are some other things that can cause a return to be deemed frivolous, such as striking out the pre-printed language above the signature line.

But I don't see how this type of amended return could be considered frivolous.

If an original tax return shows a refund of only $15.00, does that make it frivolous?

No, in fact, not only is such a return not frivolous, but the taxpayer may be required to file the return, based on their income level or other factors.

The amount of the refund has no bearing on whether a return is frivolous.

If you want to talk your client out of filing the return, charge her a $20.00 fee to prepare it.

BMK

[JCH]

Sounds like a waste of time, paper and postage to me. IRS won't care, but I wouldn't do it for an amount this small unless I really valued the client. Personally, I would charge for this, and the charge would outweigh the value of the refund. Case closed.

[S T]

Also

Besides the other posts above, keep in mind that IRS probably already has the posting of the Student Loan Interest on the taxpayer's transcript, so they can check on it. but then you could always attach the Student Loan Interest statement to the amended return.

It is $15, and every $5, 10 or 15 dollars worth counts to each and every taxpayer right now. Of course each of $ means something to us as preparers as well, as it is our time, paper, ink, postage, etc.

If you value the client, it is "goodwill" and sometimes we just need to do that for our clients. You will have to be the one to decide whether or not to charge, sometimes a hard decision, but the t/p might return for next year and you can raise the fee next year to include the cost of this. Maybe do it "gratis" and ask the t/p for some referral clients!


Sandy

[taxea]

Here is where I would draw the line....If it is my error, I do the return for nothing and the client get's the small refund. If the client made the error then I explain to the client that my fee for an amended return starts at $150....with the question "Do you really want to spend that kind of money just to get 15. back?"

I don't know that the IRS will concern themselves when a client doesn't declare an expense that is going to give them such a small refund. taxea