What is a substitute for return (SFR)?
You may find yourself in a situation where the IRS has already filed “their version” of your tax returns for you. This is called an “SFR” or Substitute for Return. Clearly, the back tax filings completed by the IRS on your behalf will not attempt to identify any deductions you may be entitled to (beyond the standard deduction and one personal exemption). The IRS will be filing your back tax returns (SRFs) with the best interest of the federal government in mind. In fact, the IRS considers the non filing of tax returns so serious that it sometimes imposes penalties as high as 25% of the tax you owe. Additionally, all taxpayers should be aware that the failure to file tax returns may be construed as a criminal act by the IRS.
