SFR

The first requirement for resolving an IRS or state tax debt is tax compliance. Contrary to what many people think, if you owe back taxes, your first priority should actually be paying the current year. Those that don't withhold or pay their current taxes often find themselves in a viscous cycle of constantly struggling to re-pay back taxes and continually owing when it comes time to file again.

If you don't file your returns, The IRS may file for you.

When a taxpayer does not file a return for one year or many years, frequently the IRS will file the return(s) for them. When the IRS files a Substitute Filed Return (also known as an SFR) most of the time the taxpayer will end up owing significantly more in back taxes than if they had filed themselves.

IRS Collection Statute Expiration Dates

The Collection Statute Expiration Date (CSED) for IRS taxes is, in most cases, 10 years. Once this Statute period has run, any remaining tax debt is forgiven. The statutory period begins on the date the tax debt is assessed which is usually shortly after a taxpayers returns are filed. If a taxpayer never filed their returns the Collection Statute would begin on the date that the IRS creates a substitute return (SFR) for the taxpayer.

January 22, 2007

by Jay Freeborne, E.A., Washington Tax Services

From the thousands of contacts Washington Tax Services receives every year, our most recent experience is an escalation in "Substitute for Return" cases and "Audits." This trend seems to confirm rumors that audits and compliance cases increase during Republican administrations, while in Democratic administrations, collection cases grow.

Substitute for Returns (SFRS)- Why are they filed?