Superseded Return Didn't Supersede

[cust25yr]

Hello,

TT changed one of their income sections from 3 options to 2 and I selected the wrong one. Thought I was getting a refund due to new Covid tax changes. ESubmitted the return latter part of April then realized I chose the wrong option and actually owe them which I originally thought. Within an hour of Esubmitting I did a Superseded return, wrote Superseded in red on the top and mailed it in with a check. TT wouldn't allow me to resubmit the corrected return and it was too early to do an amended return.

My bank statement shows 8 days after submitting both returns IRS cashed my check but on the same day issued me a refund to my bank account. I thought a Superseded return was to take precedence over any prev returns. I know the refund the IRS sent needs to go back to them.

Will they be sending me a notice I need to send it back? Will they wait several months so I have to pay interest?

Any suggestions what I need to do?

Thanks

[Critter-3]

And this is why you NEVER amend (not superseded ... that is a business return designation only)  a return before the original return was fully processed ... that was the reason for NOT letting you amend too soon.    If this is for a personal return then you should have mailed in a form 1040X (not an original 1040 with red letters on top) so although the check you sent was cashed right away  it is highly unlikely the new 1040 will ever be looked at ... if it is it will be months from now.  

Now if you did mail in a 1040X was the amount on line 18 the original refund you did get ?    If so the IRS will eventually process the amended return and all will be right.  

If you sent in a 1040 by accident then WAIT for the IRS to ask what that payment was for ... only then should you respond with the correct 1040X form ... please don't jump the gun again and make things much worse.  

[cust25yr]

Thanks for the info!!

The doc I read mentioned for my situation to do the Superseded return. I thought doing it the same day would replace the EReturn.

It is a personal return and I used the 1040 not the 1040x. I used TurboTax to generate the corrected return. Didn't see anything about a 1040x, don't know if Turbotax even has that form.

[Critter-3]

Of course TT has the 1040X ... you even mentioned the 1040X was not allowed because they were updating the program and the IRS requested that it be taken offline for a while to keep folks from doing exactly what you did.  The "superseded" return will most likely be ignored but time will tell.   And the return you MAILED in will take months to even see the light of day ... there was no possible way for it to possibly stop the original return in the processing que.  

[cust25yr]

Didn't know the 1040x is the Amended Return. Never heard of that form until you mentioned it.

I'll wait til I hear something from the IRS as you suggest.

[wxwx]

I have seen several of your replies in different places admonishing the filing of a superseding 1040 return.  While I do understand the temporary confusion and delays these may cause, there are cases (which I won’t go into here) where filing a superseding return before the filing deadline would be the preferred method over filing an amended return after the filing deadline.  One can find online articles by the National Taxpayer Advocate Service, an organization within the IRS itself, (as well as articles on other reputable financial sites), on how to file a superseding personal (i.e., 1040) return.  The problem that arises is that unfortunately the IRS agents processing the returns don’t know how to handle them; that is, there a disconnect between the advice given to taxpayers and the training of the agents processing the returns.  

While it is clear that a mailed superseded return would almost never be received in time to intercept an “erroneous refund” from an originally filed electronic return, eventually the superseding return (if postmarked before the filing deadline) should completely replace the original return and the taxpayer shouldn’t be charged interest if the correct payment was made when the superseding return was filed and the erroneous refund was timely returned.  It does take time to sort out, so it’s something you absolutely want to try to avoid if possible.  But, if taxpayers are being advised that an option is available, they shouldn’t be penalized or chastised for trying to responsibly follow the revision procedures just because agents aren’t trained on how to process these.  One can find case law affirming the validity of superseding 1040 returns.  These past two years have just been so overwhelming that patience and understanding is needed all the way around - by taxpayers and the IRS … as the IRS should continuously strive to improve clear communications and agent training.

Sent from my iPad

[cust25yr]

wxwx

Thanks for your post. I did nothing wrong using the Superseded return. All the Doc I found had no mention it was only for businesses and seeing what you pointed out, it's also for individual returns. Still haven't heard anything from the IRS.

Thanks again!!

[macuser_22]

The IRS defines superseded returns in IRM 21.6.7.4.10 (10-01-2021) that does say individual tax returns superseded before the due date of the return.

Chapter 21.6 of the IRM is Individual Tax Returns - not business returns.

[quote]

1. An amended (Form 1040-X) or corrected (duplicate) return filed on or before the due date or the extended due date is a superseding return.

2. Correspondence postmarked on or before the due date or extended due date, requesting changes to tax returns, is processed as superseding information.

https://www.irs.gov/irm/part21/irm_21-006-007r#idm140053624215776

[macuser_22]

---

@cust25yr wrote:

Still haven't heard anything from the IRS.

---

The IRS is still backlogged because of staff shortages and COVID.    They are very slow to open and process mail.

Once it gets entered into the processing system they will find two returns that will "red flag" both for human processing.  Expect anything that requires a human to do at the IRS to take many-many months (it took the IRS until mid 2021 to get late 2019 tax returns entered - well over a year).

[cust25yr]

Thanks!!

[cust25yr]

Finally got a letter from IRS this week. They said they recalculated one of the forms. They didn't include the form or say how much I owed if anything. They provided a payment voucher form but no amount was on it, only "if I need to send a payment use this form." I tried 15 times to call the IRS and everytime it says "we're maxed out call later or next business day." So I went through the process of creating an IRS account and was able to see I owe the amount they sent me incorrectly plus interest. The reason for the Superseded Return was to prevent them from sending the incorrect refund.  Since the incorrect return I E-Filed had an incorrect AGI, that same AGI shows on the 2020 Tax Return Transcript in my account. That AGI could be important for other tax benefits I received in 2020.

So my question to the experts here...should I just pay the amount they show in my account which includes interest I shouldn't have to pay if they used the Superseded I sent in and they cashed the check I included, and hope the incorrect AGI doesn't cause me a problem or send them a description of what happened, include a copy of the Superseded return and ask them to recalculate the AGI?

Since they had my Superseded return, check, along with the original incorrect E-return but still used the wrong incorrect one, do I risk they really mess things up, drag things out and charge me more interest?

Thanks!!!

[NCperson]

@cust25yr - it;s really hard to follow what you wrote; I am very sorry.  

the best course of action is to NEVER amend a return until the IRS has settled the original return.  It risks too much confusion. 

If the SUSPERCEDED return is an amendment (you didn't send in a whole new return did you???), they should pull the check out of the envelope and post it to your account (how long ago did you mail the check?)

At this point DO NOTHING.  Wait for that 2nd check to clear.  Wait for the Amendement to clear.  Do not try guessing what the iRS is going to do, it's just going to make the situation worse.  Let the dust settle!

[cust25yr]

Thanks for writing to this thread. It may seem somewhat complicated but as others mentioned I did nothing wrong with sending in a Superseded Return. Turbo Tax changed one of their options I'd used for many years. I selected the wrong option and thought the refund I was getting was due to the pandemic stimulus. Within an hour I realized it was incorrect and I found the correct option. It was too early to file an amended return and I found plenty of doc describing the Superseded Return was what I should do and it would be looked at instead of the original E-Filed incorrect one. I wanted to prevent them from sending me a refund when I actually owed money. When I sent in the Superseded Return, yes, the entire return on paper with "Superseded Return" in red at the top of the first page as instructions said, with a payment back in April 2021, it was only an hour previously sent the E-File. A few weeks later I saw on my bank statement IRS both cashed my check and issued me a refund. So they had the Superseded return but decided not to use it.

Everyone here suggested not to do anything until IRS contacted me which just happened this week, over a year later. As mentioned they didn't include the form they changed or the amount I owe. Only looking at my IRS account did I see the amount I owe along with the wrong AGI entered. The incorrect AGI could be a problem because some tax benefits are based on that but haven't heard of any problems as of yet.

The letter mentions I can contact them if I don't think their changes are correct. I can't see what changes they made as they didn't send me anything. The form they changed doesn't appear in my account. Also the letter says if I don't contact them, they will start collection proceedings.

So my question is, do I just pay what I owe and hope the other tax benefits based on the AGI don't become a problem or explain what happened to them and tell them they used the wrong return and ask them to correct it? I do agree I do owe the money as they sent me a refund I shouldn't have received.

Thanks

[Critter-3]

There was noting wrong with sending in a superceded return EXCEPT that the IRS would process the original return way before they could process the second return.  So them sending out the original refund is to be expected  as is   them cashing the check for the balance due on the paper filed return.  Eventually they will get around to processing this "superseded" return and pairing it up with the payment you sent and send you out a notice asking for the all or part of the original refund to be sent back ... please wait for the IRS to catch up in this matter and expect it to take 6 months to a year to process everything.

Next time wait for the original return to fully process  before sending in an amended return or a superseded one as you can see not waiting is causing confusion. 

[NCperson]

@Critter-3 - only question - if @cust25yr knows he owes money on the 2020 tax year, why not send in the money now? He knows he is obligated to it and does not expect the IRS to settle the Supercede in a way that he doesn't owe it. 

1) if I understand correctly, the original return had a refund on it; and the IRS send it to @cust25yr 

2) then the Supercede required a payment, so @cust25yr send in that check to be whole with the liability to the IRS

3) in essense, why wouldn't @cust25yr send 1) back to the IRS now? his account shows this (or a near enough number) as outstanding. .