Why You Don’t Want the IRS to File a Substitute Federal Income Tax Return for You

For most of us, filing our federal income tax return is a chore we’d rather not do. However, some people become so paralyzed with anxiety and fear that they do not file their income tax return—sometimes for years. They may not even be able to open the letters they receive from the IRS warning them of the consequences of not filing their returns. If you are one of these people, you are not alone. Unfortunately, ignoring these letters and failing to file required tax returns could come with a high price.

Why You Don’t Want the IRS to File Your Income Tax Return

Once the IRS realizes that you have not filed your income tax return, they will first send you letters reminding you to do so. If you fail to do so, the IRS will eventually send you a “Notice of Proposed Individual Tax Assessment”—also known as a 30-day letter—advising you that the IRS has not received your tax return and is preparing a substitute for return (SFR)—a substitute tax return. The letter will also advise you of a proposed amount of taxes that you would owe and the penalties and interest being assessed against you. You would have 30 days to file your own return, accept the IRS’s assessment and pay the taxes, or dispute the assessment.

You do not want the IRS to file a substitute tax return. If the IRS does this, the amount of taxes you owe would be based on the following:

  • Wage and other income information, such as 1099 income, dividends, and sale of stock, reported by third parties.
  • No consideration for whether you are married and filing jointly or whether you have any dependents.
  • No consideration for any itemized deductions or tax credits you could take that would reduce the amount of taxes you owed.

If the IRS files for you, you would most likely owe substantially more taxes than if you filed your own tax return with correct wage and other income information and all the deductions and tax credits you can take.

You Can Still Take Action If the IRS Files a Substitute Tax Return for You

It is never too late to try to file your past due tax return. If you received a 30-day letter from the IRS, you should contact an experienced tax attorney immediately to contact the IRS for you to arrange to file your own tax return. You may need an extension to do so if you do not have the W-2s and other tax documents to prepare your return—a common problem for people who file their tax returns late. Even if the IRS filed a substitute return for you, an attorney can help you reach an agreement with the IRS to allow you to amend the tax return and work out a payment plan to pay the taxes you might owe. Call our experienced legal team at 800.721.7054 to learn how we can assist you.

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