Why Will The IRS Prepare A Substitute For Return / SFR?

Before I answer the question, what is a Substitute For Return?

A Substitute For Return, also known as a service filed return, is a tax return that is not prepared by you, the tax payer. A Substitute For Return is a tax return that is actually prepared by the IRS.

To answer the question, the reason why the IRS would prepare an SFR, Substitute For Return, when you haven’t prepared one is because they believe by having the tax return prepared by them, you actually will owe tax.

If you haven’t filed a tax return, it would be to their benefit for them to file the tax return in order to assess the tax and have the tax put on the books so that you pay the tax voluntarily or through some sort of enforced collection activity, such as a Wage Levy or a Bank Levy.

So it’s in the government’s best interest and in the interest of the IRS to prepare a Substitute For Return for you if they feel that you owe them money, and that’s generally the only reason that they’re going to do so.