The IRS Can File a Substitute Return on Your Behalf

substitute for returnsWhat are the Drawbacks to Letting the IRS File an SFR on your behalf?

If you don’t look forward to filing your taxes, having the IRS file your return for you might not sound so bad. However, there are several drawbacks to the Substitute for Return (SFR) filed by the IRS:

  • The SFR might not give you tax credits you should be eligible for, such as the Child Tax Credit.
  • The SFR might not include all of your dependents.
  • If you itemize, the SFR won’t include your mortgage interest deduction or charitable contribution deduction.
  • You might miss out on business expense deductions, such as the home office deduction.

In short, the SFR will likely result in a much higher tax liability than if you filed a return yourself.

Notices About Unfiled Returns

Before the SFR is filed, you’ll receive several IRS notices about your unfiled tax returns. First, you’ll be notified that the IRS has no record of your tax return, and a proposed assessment for the tax year. This assessment may be based on a W-2 informational form sent to the IRS by your employer or a 1099 form.

If you receive one of these IRS notices, your problems aren’t just going to magically go away. The IRS will file the SFR and assess tax against you. After that, the IRS collection process will begin.

If you don’t respond to the first notice within 30 days, you’ll receive a Notice of Deficiency. You then have 90 days to file your return or petition the Tax Court. If you do nothing, expect to receive more notices, but this time they will involve enforced collection actions, such as the filing of a federal tax lien or a wage garnishment.

File Your Own Return

If you receive one of these SFR notices from the IRS, file your tax return! Your first priority should be to file a return before the IRS files the SFR.

If you didn’t file because you can’t afford to pay your taxes, you have options. You’re much better off exploring these options before the SFR is filed and before the IRS begins the collections process.

Never ignore an SFR notice from the IRS. If you need help negotiating a tax debt solution, contact a tax attorney for assistance.

Ayar Law provides creative solutions to your tax problems, including Offers in Compromise and audit defense. Call us at 248-262-3400 for free, confidential legal advice with no obligation.


Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.