Clients should know about a special return as the extended tax deadline nears.

A superseding federal tax return, which is a second return filed by the original due date (including time allotted for an extension), can replace an entire original return. It's “a complete reboot,” said James McGrory, CPA at Drucker & Scaccetti in Philadelphia.

“Contrast this with an amended return, a subsequent return filed after the extended due date of the original return,” said Brent Lipschultz, partner in the personal wealth advisors group at EisnerAmper in New York. “It typically comes up in limited situations. For example, where a client files a return early and new or revised information is received, such as changes to brokerage tax statements or revisions to Schedule K-1s.”

Robbin E. Caruso, CPA, CGMA, partner and co-chair of the national tax controversy practice at Prager Metis in Cranbury, N.J., said these returns can be used to include a missed tax election or forgotten forms or schedules, or in cases where a taxpayer who filed a return and applied their overpayment to the following tax year and who now wants the overpayment refunded.

“Taxpayers file early to get a refund and then receive additional tax forms they forgot [about],” added Phyllis Jo Kubey, an enrolled agent in New York.

Superseded returns “can be useful to avoid penalties if the original return underreported income,” said Miri Forster, principal and co-leader of the tax controversy practice at EisnerAmper in Iselin, N.J. “Superseding returns are also useful to satisfy international information reporting requirements” as well as for some business partnerships.

“Most people don’t want to go on extension because of fear of an IRS audit,” Lipschultz said. But this year an extension allows filing a superseding return as late as Oct. 15, he noted.

“Preparing and filing returns during what seems a never-ending tax season due to the pandemic has been trying on tax practitioners, with information being very slow to obtain,” McGrory added. “Advisors to high-net-worth individuals should consider filing extensions for their clients by July 15, even if additional time to complete a return isn’t necessary.”

These returns—which many clients might not know about—are useful in light of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which made changes to tax laws applicable for the 2019 tax year, said Jonathan Curry-Edwards, a principal at the New York firm Friedman LLP and a leader of the firm’s private client tax services team.

For example, CARES retroactively fixed an error in tax reform regarding qualified improvement property.

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