From time to time, tax professionals learn that a client previously filed a false return. Sometimes that revelation comes when an accountant discovers an innocent mistake while preparing a subsequent return for the client, and on other occasions the client will “come clean” and admit to an accountant or (preferably) a lawyer that a prior return intentionally omitted income or claimed false deductions. While the Internal Revenue Service gives taxpayers the option of amending prior returns, there is no legal requirement to do so. However, each year between three and four million taxpayers file amended returns on Form 1040-X. Advising a client as to whether he should avail himself of the option of amending requires careful consideration of the pros and cons of curing past errors.

Option to Amend