Unfiled IRS Tax Returns & IRS Substitute Filed Returns

The worst thing a taxpayer can do is not file tax returns.

If you earn enough income to be required to file, you should do so even if you owe. The IRS charges a penalty for late filed tax returns that can be avoided by filing on time. Unfortunately, if you cannot pay on time, you will still incur penalties and interest. However, filing on time will waive the failure to file on time penalty which can be substantial.

If you do not file tax returns for years you met the filing requirement, the IRS will eventually file them for you. These returns are known as “SFR” or substitute filed returns. The IRS SFR unit simply uses the income documents reported under a taxpayer’s social security number to prepare the unfiled returns. When the SFR unit creates the unfiled return, they send a Notice of Deficiency to the taxpayer to inform them of their determination. The notice of deficiency will provide the taxpayer the opportunity to:

  1. Accept the SFR return, or,
  2. Appeal the SFR prepared return.




If the taxpayer does not respond by the due date on the notice of deficiency, the SFR return is finalized by the IRS and after a certain period of time, collection notices will be mailed. The SFR unit does not collect outstanding taxes so once the SFR filing is closed, the file is transferred to the “ACS” automated collection unit for further action. ACS will send a progression of collection notices for each tax year there is a balance due. The 1st notice is known as the amount due which provides the total balance due with penalties and interest. It provides the ACS phone number and normally gives 30 days to pay the balance due or contact the IRS to resolve the tax balance. If the taxpayer does not respond, the IRS will send the final notice of intent to levy informing the taxpayer that the IRS may seize income or assets after the date on the notice without further warning.

If you have unfiled tax returns and need a tax preparer, Resolve Tax can help. Whether you have your income documents for each year, Resolve Tax will file a power of attorney and order those documents to prep the unfiled returns. Once you become compliant I can determine what tax resolution options are available to you. If you would like more info, please contact Resolve Tax at 800-721-3890.

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