What is An SFR?

The IRS Filed a Substitute for Return on Your Behalf!

If you failed to file your tax return(s) for one or more years, you might be surprised to learn that the IRS has filed an SFR, a substitute tax return on your behalf. When the IRS decides to do this, they base the substitute return solely on whatever information they have at their disposal.

Unfortunately, when they file the return(s) for you, they won’t allow for deductions, write-offs, and credits. And their computer programs, in many cases, could overstate your tax liability.

Naturally, the best way to avoid this from happening is to file on time—every year. However, if you are delinquent and you’re still behind from filing those years, here’s more information on how the process works.

The Process

When the IRS begins the substitute for return process, they’ll send a letter informing you they have not received a return for the delinquent year(s). They will propose a tax liability assessment (plus additional penalties and interest) based on your income from those years. This letter also notifies you that you have 30 days to submit a completed 1040, a signed Consent to Assessment and Collection form, or a return letter that provides the reasons you’re not required to file or any other special circumstances you feel the IRS needs to consider.

If you don’t respond within 30 days, the IRS is required by law to send a statute notice of deficiency (SNOD), which is also known as a 90-day letter. This letter notifies you that the IRS is going to assess the tax owed along with any penalties and interest, and it also informs you of your right to appeal to the U.S. Tax Court.

Once you receive this letter, you have 90 days from the letter’s date to dispute the amount proposed. If you don’t respond to the SNOD, the IRS can assess taxes and begin collection efforts, including liens, levies, and garnishments.

That being said, you might wonder how does the IRS gets the information they use to prepare your substitute returns?

The Substitute for Return (SFR) program gathers information from W-2s and 1099s and third-party sources and then creates the return based on that information. Once the IRS computer has filed a substitute return, the IRS will inform you by mail and ask for your consent to the proposed return. The SFR only allows for the standard deduction, and a single or married filing single status based upon the prior year’s filing.

What to do when the IRS has filed a substitute return.

Thankfully, even after the IRS has filed a substitute return and assessed taxes, you can contest the amount by filing a correct return. If your attempt to contest doesn’t succeed, you’ll need to pay the amount due and file a claim for a refund. If the IRS denies your claim, you can still file an appeal.

Don’t wait any longer! File Your Back Taxes with SFS Tax Problem Solutions to avoid additional fees and penalties.

You should always try to file your tax returns on time, but if you have failed to do so in the past, you should still consider filing a delinquent return to take advantage of your deductions and exemptions. In some cases, you might even be eligible for a refund, but you must act fast, as the time limit to claim the refund is three years from the original filing deadline. Even if you won’t receive a refund, it takes weeks or even months, especially during the COVID pandemic, for the IRS to process your original returns. We will request the suspension of all collection efforts while they investigate the filings.

Regardless of your situation, SFS Tax Problem Solutions can help file your returns and navigate the SFR process. We specialize in helping taxpayers. Generally, you will not have to speak to the IRS ever again.

Please contact us today by calling 877-355-8010 or completing this form. We offer free consultations during which we can assess your tax situation and work toward potential solutions.

Remember, the statute of limitations for receiving tax refunds is only three years from the original filing deadline, so please reach out today!

The content provided here is for informational purposes only and should not be construed as legal advice.