The IRS allows individuals and businesses to file amended returns to promote justice and equity. Amended returns are new returns filed to correct any errors contained on a prior return.
An amended return does not provide a complete defense to a tax crime. However, such a defense might supplement the good faith defense, which can show that the defendant fully intended to comply with the requirements of the tax code and promptly filed an amended return to correct any errors.
In this line of defense, timing is everything. It’s critical to recognize whether the amended return was filed before or after the IRS investigation.
Also, did the defendant have knowledge of the investigation? The prosecution cannot use an amended return to prove that the defendant knew the original return contained erroneous information.
But, it might be an admission of the existence of a tax deficiency; thus, if it is unlikely to go far towards a good faith defense. The timing of filing an amended return often suggests that the defendant was reacting to learning of an IRS investigation. This actually does more harm than good.