Level 3

Is there an audit risk to amend a return the second time to reduce business expenses?

Forum|Forum|6 years ago
June 17, 2020
3 replies
27 views

Hi,

A tax payer came to me to amend a 2019 return I did not prepare. This amendment will be the second time he/she will be amending the 2019 returns. Amending this return will involve reducing Schedule C business expenses up to about $55K increasing his/her tax liability substantially.

a. Will this amendment increase his/her audit risk even though he/she will pay more money to IRS?

b. Taxpayer wants her income increased so he/she could qualify for a bank loan. Will this be a reasonable reason from IRS perspective? I doubt it will be, but wants additional expert opinion.

Any advise will be much appreciated.

Thank you.

This topic has been closed for replies.

Just-Lisa-Now-

Intuit Community Champion

"b. Taxpayer wants her income increased so he/she could qualify for a bank loan. "

Big red flag!

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

G

GsoulsAuthor

Level 3

What is your take on concern # a?

Just-Lisa-Now-

Intuit Community Champion

Im honestly not sure what IRS uses for audit flags...what did the original return look like? Why did they amend the first time? how different is it from the prior year's return when you add this income?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

abctax55

Level 15

"...b. Taxpayer wants her income increased so he/she could qualify for a bank loan."

Audit risk shouldn't be part of the consideration, ever.......

In this case what is being considered is illegal as hell; it's mortgage fraud, and both your client and YOU could be subject to fines, penalties & jail time.

HumanKind... Be Both

itonewbie

Level 15

Potential fraud issues aside, perhaps @BobKamman could offer his view on audit risk related to successive filing of 1040X's since he has good experience working with the IRS.

---------------------------------------------------------------------------------Still an AllStar