Superseded Return Didn't Supersede

[cust25yr]

Today I went into my IRS account to pay what I owe and to my shock and disappointment, they jacked up the amount another $45. What are they going to do, jack it up every week?

So they sent me a notice they modified one of my forms and a voucher with no amount due or listed. They didn't send a copy of the modified form. After that part it says if I don't contact them  agreeing to the changes in 60 days they'll start collection proceedings against me. Am I supposed to be a mind reader? Agree to something they didn't send? Did they expect a blank check since they didn't state what I owed?

What a rotten low down bunch. They're charging me interest on something they shouldn't have sent out in the first place. According to all the doc I read before sending the Superseded return, they should have replaced the original return with the Superseded one. But instead they processed the incorrect one then over a year later they did something and I'm to wait another 6 mo to a year for them to look at the Superseded one.

I just made an e-payment through my IRS account for the original amount they shouldn't have sent me and I'll send them a letter that they mentioned I should do.  Can't call as their lines are so jammed up can't even get on the wait list.

WOW!!!!!!!!!!!!

[Critter-3]

Superceeded paper returns are taking just as long as amended returns to process which is 6 to 9 months or longer (which is what you should have done to begin with after paying the original balance due).   Now all you can do is wait for the IRS to eventually process the secondary return when they may or may not refund excess fees assesed. 

[cust25yr]

I appreciate your comment.

The reason I didn't wait for the Amended return option, I e-filed in April. 2021 2020 IRS moved the filing deadline to July 15, 3 months later. You have to wait til after the filing deadline to do the Amended return. The Superseded return is supposed to replace whatever return was previously filed, in my case 1 hour before. In addition, no waiting til after filling deadline.  A reasonable person would believe the incorrect return would be replaced with the Superseded one. The Superseded return is supposed to be for Exactly this situation. I was trying to prevent IRS from issuing me a refund. They issued the refund in May, way before the filing deadline of July 15.

IRS had both returns and as proof, they both issued the refund and cashed the check attached payment for the Superseded return at the same time. They did not replace the e-file with the Superseded return as is supposed to happen

Even with the Amended return, they would have issued a refund and probably the outcome would have been the same.

Note: I corrected the year above from 2020 to 2021. Sorry.

[Critter-3]

Ok ... first the superceeded return  (that had to be mailed in)   takes months to process and since it is so rare for a personal return to be superceeded (since amending is the most common way to change a return)  it is very possible that the data input operator at the IRS  simply thought it was a duplicate return and put it in the trash.   And an amended return can be filed anytime after the original return was filed although it is best to wait  for the original return to be fully processed first.  So you did not have to wait until July to amend the return.   At this late date, since you are talking about a 2019 return, I highly suggest you check the return transcript to see what the IRS has on file for you  and if the "superceeded" return has not been registered yet then file the proper amendment instead now.  

[cust25yr]

Thanks again for your response.

It was not a 2019 return but a 2020. I filed it Mid April 2021. I only received a letter from last day of June, 2022.

That's really scary they have a paper return with LARGE RED LETTERS at the top SUPERSEDED RETURN (as IRS Doc instructed) gets thrown in the trash. WOW!!! What type of people there can't distinguish large red letters "Superseded" on them? 2 returns, one they refund and the other with a check attached that they cashed and they don't wonder why the paper one has a check attached and large red letters?

No, I wasn't allowed to submit an Amended Return until after the filing deadline, July 15. Turbo Tax doesn't allow it and I thought the IRS rules were the same. Since it's 1 year and several months later I can't submit an amended return at least through Turbo Tax. It made no sense to wait 3 months to submit an Amended return when I could send a Superseded return 1hr after the mistake. No reasonable person would think an agent with a return with large red letters on it and a check attached would throw it out or ignore it when the rules are they are supposed to use it instead when it says Superseded Return at the top. The incorrect return isn't even supposed to be processed if they have both, which they did.

I looked at the transcript for my 2020 return and didn't see anything that mentioned Superseded. The AGI shown is from the incorrect e-filed return. Where would it say Superseded in the transcript?

Thanks

[Critter-3]

LOL ... it will never say superceeded on the transcript  and even if the paper was on fire the data input operator either  didn't understand the word and trashed it as a duplicate  OR   it is still sitting in a pile somewhere still waiting to be processed.  Either way your only practical choice if you want this to be corrected   is to file an amended return before it is too late to file it. 

[cparke3]

I'm contemplating trying to do a superceding return now in the wake of the student loan forgiveness announcement.  But I'm concerned from what I'm reading here that it may not work?  In my situation, spouse and I file separate timely 6-month automatic extension for the 2021 return, so the original due date for us is October 15, 2022, which hasn't come yet and e-filing is still open.   Spouse, however, already filed a married filing separately return and got a refund, while I haven't filed anything yet.  The superceding return intended here is to change this to a marriage filing jointly return, and there will be an additional refund due.  Will e-filing a MFJ even work, or does it have to be a paper return mailed?  Will they just figure out how to reduce the refund by the amount they already paid, or (if mailing) should I include correspondence to explain what we're doing?   I don't want this processed as a 1040X amended return (albeit one filed before the extension due date) because that is usually handled as a request for an account adjustment, not a return filing, and it will leave me on record with no return filed.  And I don't think the student loan forgiveness program is going to be smart enough to consider eligibility based on amended returns, which can be filed up to 3 years after the due date...   Comments?

[Critter-3]

If you will change from MFS to a joint return with a spouse who has already filed then  the spouse's filed return must be AMENDED not superceded.  It cannot be efiled due to the change in filing status  and since you will have an additional refund you have 3 years to amend the original return.  Amending the spouse return to add you  WILL report a return filed in your name ... why ever would you think it would not ?   Just be aware that amended returns are taking 6 months to a year to process so patience will be needed. 

Of course you could just file your own return now and  amend one of them later to marry up the 2 returns ... again you have 3 years to do so ... don't be in a rush... it will take time for this loan forgiveness to happen. 

[cparke3]

"If you will change from MFS to a joint return with a spouse who has already filed then the spouse's filed return must be AMENDED not superceded."

The idea of a superceding return is to replace the original return with another original return filed before the due date.  Indeed, the regulations quoted earlier here seem to state that all amended returns filed before the due date must be processed as a superceding return anyway.  With respect to a MFJ superceding a MFS, does it perhaps matter which name is listed first?

"Amending the spouse return to add you WILL report a return filed in your name ... why ever would you think it would not ?"

Because it doesn't and I've already been in that pickle in tax year 2017.  Amended returns are not authorized by Congress.  All IRS can do with them is perform account adjustments to issue refunds or send bills, etc.   The Tax Court refers to IRS acceptance of amended returns as, "an act of administrative grace."  Superceding returns, on the other hand, are considered a totally different situation.  When a MFJ amended return is received where only one spouse filed a MFS, what they actually do is copy the one MFS return, as originally filed, to be the original filing for the other spouse too, then perform the usual amended return account adjustments.   While that happens to also achieve my student loan forgiveness eligibility goal here, it does create some major confusions for third parties if you need to use tax return filings to prove annual income, so I don't suggest it.  It also takes IRS a long time to process, as you mentioned, since amended returns are a manual process while original filings are rather automated.

[NCperson]

@cparke3 - can we step back and slow down? 

<<And I don't think the student loan forgiveness program is going to be smart enough to consider eligibility based on amended returns, which can be filed up to 3 years after the due date..>>

1) what was the motivation to file separate in the first place? That may help us understand why you now want to file joint.  

2) what about the loan foregiveness program is now motivating you to want to go back and file joint?

From what I have read from reliable sources (NY Times)

1) the foregiveness will be based on your 2020 or 2021 incomes. (so joint income under $250,000 is elgible- and maybe that is why you want to go Joint - one makes more than $125K and the other makes a lot less than that)

2) if you are on a repayment plan  where you already provided your tax return to the Loan Servicer, they will use that to determine if you are eligible for the Relief.

3) Otherwise, they were will a form you will have to fill out stating your income and it will be a 'trust me' because the Department of Education can not access the IRS records by law. 

[cparke3]

"1) what was the motivation to file separate in the first place? That may help us understand why you now want to file joint." 

Joint vs. Separate Analysis indicated separate returns would be more favorable.

"2) what about the loan foregiveness program is now motivating you to want to go back and file joint?"

Forgiveness of $10,000 in student loans (per person) thus changes the calculus considerably.   The income limits are $125,000 per person if filing separate returns (including MFS), or $250,000 if filing a joint return.   Our combined income is under $250,000, but my individual income is greater than $125,000.  This new student loan forgiveness program is essentially another COVID stimulus payment, indirectly tied to income tax return information as previously but not classified as a tax benefit this time because Congress didn't authorize it.

"it will be a 'trust me' because the Department of Education can not access the IRS records by law. "

I wouldn't be sure about that.  There's a lot of money on the line for a hunch like that.  While DOE may not be able to access tax returns directly, they could require us to submit evidence of eligibility in the form of tax return transcripts.  In concept, a superceding return would be the only way to change what will be reported on an IRS tax transcript, if it actually works that way.  We simply don't know how they are going to verify income, but I need to figure out how to get the joint $250,000 limit to apply to us notwithstanding the spouse's separate return already filed. 

[NCperson]

@cparke3 -  

1) were you two both below $125k in 2020? (look at Line 11 of Form 1040)  NYTimes reports that Dept of Education will use either 2020 or 2021 to determine eligibility so if 2020 was below 125k for each of you, you have some breathing room here to decide how to approach your 2021 tax return (and there is more time for more information to come out).  

2) "sure about the tax rules" - that is why this has been such a "cluster" to determine how to exclude high income earners.  Tax information is confidential at the IRS.  They do not share with ANYONE or ANY organization - not even other parts of the federal government (see the fight to obtain Trump's tax return as just one example!).  For the stimulus and child tax credits, the IRS itself were the ones doling out the money so they already had the data. But this situtaion is VERY different. Dept of Education can't simply ask the IRS for a data dump of 40 million returns to obtain tax information.  DOE student servicers don't have the resources to ask 40mm people to access their tax transcripts and submit; that is why there will just be simple form and what I call "trust me".  And certainly services can't process 40mm sets of tax transcripts before payments resume again on Jan 1.  (and remember, PPP was a 'trust me' and that was a lot of money as well!).

3) amending spouses tax return to be part of a joint return isn't a problem.  Folllow @Critter-3 advice above as @Critter-3  is a 30 year expert in this field.  IRS won't process the amendment for 6-12 months, but again, should not be a problem for the student loan foregiveness as DOE will not have access to your tax return in any event, unless your provide it (i.e. they can't get it from the IRS).

4) New York Times:

DOE  "will make some kind of application available by the end of the year. “The Department of Education will work quickly and efficiently to set up a simple application process for borrowers to claim relief,” according to a White House statement."

these FAQ's may help you in your journey!

https://www.nytimes.com/2022/08/24/business/biden-student-loan-forgiveness.html?action=click&pgtype=...

[cparke3]

I don't know.  DOE has a similar application called the FAFSA which collects and verifies tax income information quite swiftly before notifying schools with a Student Aid Report (SAR) to determine income-based financial aid eligibility.  So whatever application they are building for this Loan Forgiveness program is probably built on top of that.  Never was under the impression that you could give false income numbers on your FAFSA because they can't verify it and walk away with financial aid you aren't eligible for, though it is true in that case that the schools are ultimately responsible for verifying information and making the decisions.

Concern is the people at DOE who now have to implement the President's directive probably don't want to consider amended returns, otherwise the forgiveness program could get really nasty if somebody amends 2 years later and becomes eligible and has made loan payments after the freeze ended.

P.S.  Situation was the same for us in 2020, with the 2020 tax returns are currently filed separately.  I could amend the 2020 return instead to be MFJ, but obviously it is no longer an option for superceding the 2020 return. 

[NCperson]

@cparke3 - you have time to make a decision on approach; I suspect as more details come out, it'll be easier for you to make an informed decision and you'll come around to my point of view, that the DOE is not going to ask for tax returns, but rather a simple affidavit, if they have any chance of implementing this by Dec 1 (because they need that last month to inform borrowers of their Jan 1 recalculated payment).

good luck!  

[Critter-3]

Read up on this here :     https://studentaid.gov/debt-relief-announcement/

What do I need to do in order to receive loan forgiveness?

• Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education.
• If the U.S. Department of Education doesn't have your income data - or if you don't know if the U.S. Department of Education has your income data, the Administration will launch a simple application in the coming weeks.
• The application will be available before the pause on federal student loan repayments ends on December 31st.
• If you would like to be notified by the U.S. Department of Education when the application is open, please sign up at the Department of Education subscription page.