If you don’t file a tax return, the IRS has the legal ability to file a return for you!  The IRS name for this is filing a “Substitute For Return” and commonly refers to it as a SFR.  A lot of people are unaware of this process and are completely surprised when the IRS starts enforcing collections on a balance they are not aware existed!

The IRS Filed For Me, Now What?

When the IRS files a return on your behalf because you haven’t filed, they generally use a “worst case scenario” on how much you may owe.  In other words, they will make you pay the most taxes that they think you could owe.

Once the IRS prepares this return they have to send you a letter stating that they are proposing the tax return and give you a chance to reply.  Unfortunately, the IRS’s only obligation is to send it to the last known address, and if you don’t receive the letter (or receive it and do not reply) then the balance that they are proposing becomes a legal debt as if you filed it yourself!  If you have moved and don’t get the notice, then it becomes a ticking time bomb that you are not even aware of.  At any time the IRS could levy your bank account, garnish your wages, or a myriad of other collection options which you may be unaware of until it happens.  It’s a bad day to find out that the IRS has taken all of your money and you have no idea why until you call.

Client Who Experienced Substitute For Returns

We worked recently with a gentleman (goes by BC) that came in to KBPI when Todd was on the air with Willy B answering questions about tax problems.  BC had been homeless for a few years and finally got back on his feet and got a job and a place to live. Unfortunately, one day he found out he owed the IRS over $100,000 and he had no idea why.  This was more money than he had earned in total over the last 7 years!  How could he owe so much! He asked us for help.  It took almost a year but we were able to protest the returns and have the IRS reverse the tax to the true balance due, which was really about $3,000 in total including the penalties and interest!  By the way, the IRS couldn’t even tell us how they came up with such a big number!  But regardless, the amount listed was a legal balance due and the only way to fix it was to protest what the IRS had done!

If you have returns that need to be filed, the best strategy is to file before the IRS gets involved.  If they have already filed returns on your behalf, then call soon in hopes of protesting the returns before the IRS starts enforcing collections!  If you are the unlucky soul that the IRS has surprised with collection actions and that is how you found out the IRS prepared a return for you, then call as quickly as you can because these solutions take time and we need as much time as possible to stop the collection activities and help you with protesting IRS filed returns.   303-753-6040, call  or contact us soon, there is no cost for the initial meeting!