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How To Protest An IRS Substitute For Return (SFR)

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How To Protest An IRS Substitute For Return (SFR)

How To Protest An IRS Substitute For Returns (SFR)

Filing Back Taxes can be a very daunting process. If you have not filed for years, you probably misplaced most of your documentation, which makes the filing of back returns very difficult.

If you fail to file required returns for beyond typically three years, the IRS will eventually file them for you.  These returns are nothing like the returns that you would file and are certainly not in your best interest.  A Substitute For Return  (SFR), as the IRS calls them, are filed listing all income on your IRS transcripts and very little deductions to benefit you.  Regardless of your filing status, the IRS will file you as single.  The IRS will not take in consideration any dependents.  The IRS will not allow any itemized deductions but will instead only allow the standard deduction.  For most taxpayers this will mean that your tax liability will be highly inflated.

The normal sequence of events prior to the filing of a Substitute For Return (SFR) is 1) “Notice of Proposed Individual Tax Assessment” (Letter 2566) giving you 30 days to respond, 2) Letter 3219 “Notice of Deficiency”, giving you 90 days to respond.  The IRS will attach Form 4549 Substitute For Return to the Letter 3219 to indicate the adjustment to be made to your account.

If you fail to respond the Letter 3219 within the 90 days, the IRS will file the Substitute For Return (SFR) and begin to collect the “Deficiency”.

So What Is Your Best Response?

Your best response is to file an original return as a “Protest” IF it will reduce your liability.  This has to be done as an original return and not an amended return.  You would indicate “SFR Protest” at the top of the form.  It IS NOT sent to the normal service center address.  If you send it to the original service center address, that service center is supposed to pass the return on to the SFR Unit but that often does not happen or causes extreme delays.

What if you do not have the required W-2, 1099s, etc.

You can request transcripts from the IRS but understand that the original documents have vastly more information.  You may also need to request a transcript from the state to be able to see the state withholdings.

What If I only Have Paystubs and not W-2s

You can use IRS Form 4852 as a substitute tax form for the Form W-2, Wage and Tax Statement, or Form 1099-R. You would attach this form to the appropriate return:

  • Form 1040
  • Form 1040A
  • Form 1040-EZ

When Should You Allow An SFR to stand And When Should You Not?

When the outcome of the tax liability is the same as if you filed a return in “Protest”.  In this case there is no benefit unless you are planning to file bankruptcy.  In many states a Substitute For Return (SFR) is not considered a filed return.  You will want to talk to a Bankruptcy Attorney to discuss your situation.

IRS Notice CP 14- Notice Of Balance Due

Louisiana Legislation Passes Several Corporate Income Tax Bills, Taxpayer Action By June 30th, 2015, Should Be Considered To Secure Certain Benefits

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