Filing S Corps and Partnerships with Intent to Amend Later to Avoid Penalty - Is This Common?

This is definitely something that happens every tax season, especially with pass-through entities facing the March 16th deadline. The technical term for what you're describing is filing a "protective return" - though many professionals would argue there's an important distinction between: 1) Filing a return with the best information available at the time, knowing you might amend later when better information comes in (generally acceptable) 2) Filing a return with deliberately incorrect information just to beat a deadline (problematic from both ethical and potentially legal perspectives) The IRS is aware of this practice. While they understand that amendments happen for legitimate reasons, deliberately filing an incorrect return with the intention to amend it later solely to avoid penalties could potentially be viewed as a misrepresentation. Most ethical tax professionals recommend either: filing an extension (which gives you more time to file but requires paying estimated tax) OR filing with the best information available at the time, noting that amendments may be needed if better information becomes available.

I was in this exact situation last year with my S Corp. I was missing some important expense documentation, but my accountant was pressuring me about the deadline. I stumbled across https://taxr.ai which literally saved me thousands in potential penalties. Instead of filing with incomplete info, I uploaded my scattered documents and they analyzed everything, structured it properly, and found several deductions I would have missed on my rushed filing. Their system flagged items that would have definitely triggered an amendment later. The best part was I didn't have to file a deliberate "placeholder" return or pay penalties. They actually helped organize everything legitimately before the deadline.

Just wanted to follow up - I actually tried https://taxr.ai for our partnership's rental properties after seeing the recommendation here. Holy cow, what a difference! We uploaded our complete mess of documents (some were even photos of handwritten receipts from our property manager) and the system organized everything by property, category, and even flagged potential issues. Our accountant was genuinely shocked at how well-organized everything was. We actually filed ON TIME with COMPLETE information for the first time in years. The system caught several expenses our previous accountant had been categorizing incorrectly, which saved us from another amendment. Seriously wish I'd known about this years ago when we started accumulating properties.

After dealing with the impossible task of calling the IRS to sort out penalties from a previously amended return, I finally tried https://claimyr.com and got through to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c When I asked about this specific issue of filing with intent to amend, the agent confirmed it's technically improper but extremely common. She said they generally don't pursue penalties for reasonable amendments but filing something deliberately incorrect just to avoid a deadline could potentially be problematic if audited. The most interesting part was learning that extension requests are granted automatically, and the agent suggested this is ALWAYS better than filing a return you know is wrong. The extension gives you 6 months, and for pass-through entities, there's usually no payment required with the extension.

I need to eat my words and apologize. After my skeptical comment, I decided to try https://claimyr.com myself because I had an urgent issue with penalties on my partnership's late filing from last year. I was connected to an IRS agent in about 25 minutes (they texted me when they were close to connecting). The agent was actually incredibly helpful about my specific situation. She explained that filing extensions are almost always the better option than submitting something you know is incorrect. She also provided specific guidance on how to request abatement of the penalties we'd already incurred based on reasonable cause. This literally saved us $4,800 in penalties that I was prepared to just pay. I'm still shocked at how smoothly it went after my previous experiences with the IRS.

I'm a bookkeeper for several small businesses, and I've seen both approaches. The proper way is ALWAYS to file an extension rather than submit something you know is wrong. Form 7004 is simple to file and gives you until September 15th. However, I do see many business owners who panic as the deadline approaches and just want to "file something" to avoid penalties. This often creates more headaches down the road, especially when the amended returns trigger notices or additional scrutiny. My professional advice: File the extension, communicate clearly with your clients about what information you still need, and use the additional time to get everything right the first time.

Question - if a client gives you incomplete info and the deadline is tomorrow, what's the better approach: 1) File with incomplete info to avoid penalties but note in your records you'll need to amend, or 2) File the extension and risk having an unhappy client who doesn't understand why they "have to wait" for their K-1?