Definition: a formal way for the Internal Revenue Service to make an educated guess about how much taxes you might owe. The whole purpose of a Substitute for Return (SFR) is to arrive at a definite dollar amount of your tax liability, so that the IRS can begin collection efforts. The IRS uses its substitute tax return to issue a proposed assessment of taxes you owe. If you don't respond to the proposed assessment, that assessment may become final. Once the assessment becomes final, the IRS can now legally collect on the tax for a period of ten years.
The IRS has developed rules and procedures for calculating substitute returns, which is detailed in the Internal Revenue Manual, Delinquent and Substitute for Return Processing.
The best way to resolve a Substitute for Return situation is to file a tax return. The IRS must accept a tax return with your signature.
Also Known As: SFR
