What are the potential penalties for filing an erroneous tax return, if I amend the return immediately?

Question

In prior years, my school partnered with a certain accounting firm to provide us with 1098-Ts. Up until November of 2011, I was receiving emails from them mentioning this service. In January, their communications were strangely silent, so I went to that service on the web, looked up my 1098-T for 2011, and filed my taxes, earning myself a nice little refund.

Then, a few days ago, I got an email saying they were using a different service, and not to go to this particular service for my tax forms.

Today I received an email saying my correct 1098-T was available. Unfortunately, after redoing my return with the correct information, my refund is rather smaller. My returns have been accepted by both the IRS and the state electronically, but I have not yet received my electronic refunds.

I used the same online tax service that I filed originally with to amend my return, and print it out. Now, I'm just waiting for the electronic refund to be deposited, at which point I will get cashier's checks for the difference (I hate waiting for paper checks to clear) and mail them off to both the IRS and the state along with my amended returns.

Given that I'm being as proactive as I can with this, what are the possible penalties I could face, and is there anything else I can do to mitigate them?

Answer 1

http://www.irs.gov/irm/part21/irm_21-004-005r.html#d0e1966

You have 21 days to fix the problem in most circumstances. Read the rest of that page to see which category of erroneous refund you have, and you will get some more details on what you should do and how to file.

You could also visit a local IRS office if you have one and try to arrange repayment there.