If you have unfiled tax returns, the IRS may prepare a return for your unfiled taxes called a Substitute for Return (SFR).  This return will likely result in a high tax balance.  If the IRS has prepared a return for you or if you need back tax help in paying back taxes, contact Austin& Larson Tax Resolution for resolution of your IRS problems. 


Have you gone multiple years without filing a tax return with the IRS?  Do you have unfiled tax returns? Are you not sure where to go for help with back taxes and IRS problems?   Are you wondering what the IRS will do to you because you have unfiled tax returns?  If this scenario applies to you, you need to know about an IRS substitute for return (SFR).  The IRS will file a return on your behalf.  Sometimes this will be the year after the return was due and sometimes it can be multiple years after the returns were due.  So what is a SFR and what are your tax help options following this event?


A substitute for return is a return filed on your behalf by the IRS when you have outstanding, unfiled returns.  The IRS will use the information they have available to compile all elements of your return income sources.  They will generally not include any exemptions, dependents, or credits you may have otherwise been entitled to when filing this return.  Usually this type of return will result in a much higher tax debt due for the taxpayer. The IRS may also prepare these returns in bulk also.  With this preparation method, you may not have had a tax balance today, but tomorrow all your back-tax returns may be prepared by the IRS.  The resulting liability for you to eliminate could be anywhere from a couple hundred dollars to over a million depending on the returns they prepare.

For example, you are a married self-employed contractor with 1099-MISC income of $100,000.00 for tax year 2008 through 2016 and have not filed for any of these periods.  You also have business allowable deductions of $45,000.00 in each of these years. Your spouse does not work and you would otherwise claim married filing jointly as this would result in a lower tax balance due in each of these years.  With this information, the IRS may bulk file your 2008-2016 return as Married Filing Separately with $100,000.00 of taxable income instead of the $55,000.00 it should have been as Married Filing Jointly with your claimed deductions.

Once the IRS has prepared a SFR on your unfiled taxes, you owe the balance the same as if you had filed the return yourself.  Many clients have come to us and said, “But I really do not owe that much, so the IRS should not be able to collect that amount.”  Others believe that the balance is not a valid balance and refuse to deal with it.  However, this is not the correct approach to take with an SFR.  Whether or not you believe that the balance is accurate or valid, the IRS will move forward with collection action, including liens and levies, to collect the balance.  The argument that you should not owe that much will not matter to them.  You must either file an original return or establish resolution on the balance in order to get the tax debt adjusted.

Another thing to keep in mind is that you only have a limited amount of time to get any payments you’ve made back if the balance is reduced.  If you have an SFR with a balance that you have made payments on, you only have a limited number of years to file your original return to get any excess payments refunded to you.  If you do not file and have the balance adjusted within the time frame, then the IRS will not refund your payments or apply them to other balances.


You now have a bunch of SFR returns filed on your account and your balance is much higher that it should be.  Now what do you do? You likely need back help on handling your IRS problem.  Depending on the resolution sought, you will most likely want to file original returns to replace these SFR returns.  In order to do this, you will need to prepare a return for each of the years that have been filed on your behalf.  Once the IRS has this adjustment in place you can move forward with resolving the remaining tax debt due.

Once the balance is at the correct amount you can work on paying back taxes.  Some of the resolution options available to you are the Offer in Compromise, Installment Agreement, or Currently Non-Collectible Status.  Bankruptcy may or may not be a viable option as an SFR is generally not dischargeable.  Seeking the proper tax help is going to be your best option in this scenario to make sure you are utilizing your time and resources to their full potential.  For instance, you would not want to have a lingering $100,000.00 tax debt being paid over the course of a 5 year period when you may qualify for an Offer in Compromise of $5,000.00 to settle the entire tax balance.  An experienced tax help firm can determine which option is best suited for you so you are not seeking the incorrect method.


In order to file a previously unfiled return to replace a SFR the IRS has created and placed on your account you will need to be aware of a few elements as follows:

  • Wait for your account balance to be properly adjusted after filing an original return. This process can take several months for the IRS to properly adjust your account to your newly filed return balance due.  If there are issues or IRS problems with processing, you may have to follow-up with the IRS several times or resubmit the return.
  • Make sure you file the unfiled tax returns with the correct processing unit so it actually gets processed and does not get returned to you.
  • Double check all information on your return for accuracy and completeness.

Having the proper back tax help can make this process go much smoother.  Your tax help specialist will not only determine if it is in your best interest to file an original return, but will also determine which form of resolution is going to be available to you and will best resolve your tax liabilities.  They will guide the whole process from start to completion.

If you have unfiled tax returns and need help preparing your returns or resolving and paying back taxes, contact our office.  We can review the returns prepared by the IRS and discuss your options for moving forward with resolving your IRS problems.

Disclaimer: Austin & Larson Tax Resolution has prepared this website for informational purposes only. This website is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. To get advice regarding your specific tax situation or questions, please contact our office at 866-668-2953.