Failed ADP refund question

[fiona1]

HCE received a refund due to a failed ADP test. The refund was made prior to the 2 and a half month period so it's taxed in 2003.

The problem is that the HCE already filed their 2003 taxes and they don't want to amend them. They've already cashed the refund check.

Anyone know if there are any other options to have this taxed in 2004 for this HCE? Can they return the money to the recordkeeper and have them reprocess it using a date after the 2 and a half month period?

[mbozek]

If they don't amend their 2003 return the IRS will audit their return for underpayment of taxes and demand the back taxes and interest. Thewy need to talk to a tax advsior as to why they should amend their return.