Correcting an Error: Tax Return Amendment Options

People make mistakes, sometimes. It's a fact of life. Tax filers or accountants, for instance, could commit bookkeeping errors or oversights, resulting in an understated or overpaid tax. Fortunately, some tax consultants say that the law provides two ways to sort out the problem of an incorrect return — filing a notice of proposed adjustment or filing a formal late adjustment request.

Filing a Notice of Proposed Adjustment

This option is applicable for tax filers who discovered errors within four months of filing the relevant return. Upon discovery of the error, the individual must file a Notice of Proposed Adjustment (NOPA) as stated in section 89DA of the Tax Administration Act (TAA). The Commissioner of Inland Revenue will accept NOPAs issued within the four-month response period to amend a taxpayer's previous assessment. They will make the adjustments and issue amended assessments provided that they are not technical in nature.

Filing a Formal Late Adjustment Request

Tax filers who found an oversight outside the four-month period will have to file a formal late adjustment request as stipulated in section 113 of the TAA. This section lets the Inland Revenue amend an assessment at any time to ensure correctness. Typically, Inland Revenue will accept adjustment requests that arise out of a genuine error. If the commissioner, however, does not find the error to be genuine, the tax filer can still compel Inland Revenue to accept the adjustment. This means that tax filer will not receive any tax refunds or credit adjustments as a result of a non-genuine error.

Individuals who need to amend their tax return assessments can file a NOPA or a formal late adjustment request to fix a tax error. It is best to file these corrections with the Inland Revenue rather than disregarding them outright because it will minimise the likelihood of any tax problems from arising in the future.