Will The IRS Prepare A Substitute For Return / SFR For Me If I Am Due A Refund?

Generally speaking, the IRS will not prepare a Substitute For Return for you if you are due a refund.

The only reason, that I’ve seen in practice, that the IRS is going to prepare a Substitute For Return when you haven’t prepared a return, is that they believe you have a balance due.

The IRS is going to prepare the tax return with you as a single person generally with one exemption.  The IRS is going to prepare the return such that it’s not going to be in your favor, it’s going to be in their favor.

You are going to owe more tax, generally speaking, than if you filed the tax return yourself.

So it’s in my experience that the IRS isn’t going to come along a few years after the due date of the return and look at your account transcript or wage and income transcript and say, “you never filed a return, let me prepare that for you. Okay, here you go. You got a $3,000 tax refund, go have a good time spending the money.”

The only reason they are likely to prepare that tax return for you is if, like in the example above, you owe $3,000.

It would be in their benefit to do the Substitute For Return because by doing an SFR they are putting a liability on the books, whether it is correct or not.

At that point it would be up to you to file a complete and accurate return if you don’t believe that amount is correct. It’s not to their benefit to prepare a tax return with you getting a refund.

At the end of the day, the IRS is going to prepare a tax return to put an assessment on the books so they can begin collection activity.