We are providing FREE consultations via PHONE or VIDEO conferencing for your safety during Covid 19 emergency. Please feel free to call us if you have any with questions! 877-788-2937

IRS SFR Substitute For Return Unfiled Tax Returns Back Taxes Owed

Final substitute return regs adopt temporary and proposed regs with one minor change
T.D. 9380, 2/12/2008; Reg. § 301.6020-1

Mike Habib, EA

In 2005, IRS issued temporary (also issued as proposed regs) that broadened the scope of when IRS-prepared substitute returns (SFR) are valid. Specifically, the temporary regs provide that a document or set of documents (including a Form 13496, Code Sec. 6020(b) Certification) signed by an authorized IRS officer or employee is a “return” under Code Sec. 6020(b) if it identifies the taxpayer by name and taxpayer identification number, contains sufficient information to compute his tax liability, and purports to be a return. IRS has now adopted the temporary and proposed regs as final regs with one minor change.

Background. Under Code Sec. 6020(b), if a taxpayer fails to file a return when required, IRS may prepare a return based on its own knowledge and on information it obtains through testimony or other means. The failure-to-pay penalty under Code Sec. 6651(a)(2) applies to the amount of tax shown on the return, including, under Code Sec. 6651(g)(2), any amount shown on a substitute return prepared by IRS. Absent the existence of a return under Code Sec. 6020(b), the Code Sec. 6651(a)(2) penalty doesn’t apply to a nonfiler.

In Cabirac, (2003) 120 TC 163, affd on other issue (2004, CA3) 94 AFTR 2d 2004-5490 (unpublished) and Spurlock, (2003) TC Memo 2003-124, the Tax Court found that IRS hadn’t prepared and signed a valid return under Code Sec. 6020(b). In Cabirac, IRS sent the taxpayer a notice of proposed adjustments with a revenue agent’s report, which showed enough information to calculate tax liability. In Spurlock, IRS had a conglomeration of IRS documents, many of them unsigned, apparently from its administrative files.

What is a return. The final regs, like the temporary regs, provide that a document (or set of documents) signed by an authorized IRS officer or employee is a return under Code Sec. 6020(b) if it identifies the taxpayer by name and taxpayer identification number (TIN), contains sufficient information from which to compute the taxpayer’s tax liability, and the document (or set of documents) purports to be a return. (Reg. § 301.6020-1(b)(2))

In addition, a valid Code Sec. 6020(b) return includes a Form 13496 or any other form that an authorized IRS officer or employee signs and uses to identify a document (or set of documents) containing the above information as a Code Sec. 6020(b) return, and the documents identified. (Reg. § 301.6020-1(b)(2))

Further, because IRS may prepare and signs Code Sec. 6020(b) returns both by hand and through automated means, the final and temporary regs provide that a return can be signed by the name or title of an IRS officer or employee being handwritten, stamped, typed, printed or otherwise mechanically affixed to the return, so long as that name or title was placed on the document to signify that the IRS officer or employee adopted the document as a return for the taxpayer. The document and signature may be in written or electronic form. (Reg. § 301.6020-1(b)(2))

Change from temporary regs. The temporary regs provided that any return made in accordance with the regs and signed by the Commissioner or other authorized Internal Revenue Officer or employee shall be prima facie good and sufficient for all legal purposes. In 2005, new language was added to the Bankruptcy Code at 11 U.S.C. § 523(a) that specifically provided that a Code Sec. 6020(b) return is not a return for dischargeability purposes. Therefore, the portion of the temporary regs that stated that the return was sufficient for all legal purposes is no longer correct. IRS changed the final regs to state that a Code Sec. 6020(b) return is sufficient for all legal purposes “except insofar as any Federal statute expressly provides otherwise.” (Reg. § 301.6020-1(b)(3))

Effective date. The final regs are effective Feb. 13, 2008. (Reg. § 301.6020-1(d))
RIA Research References: For substitute returns prepared by IRS, see FTC 2d/FIN ¶ S-1004; United States Tax Reporter ¶ 60,204; TaxDesk ¶ 570,103.

For Unfiled Back Taxes help CLICK HERE

Mike Habib, EA

Client Reviews
Mike has given us peace of mind! He helped negotiate down a large balance and get us on a payment plan that we can afford with no worries! The stress of dealing with the IRS is huge and Mike helped us through it all. The peace of mind is invaluable, thank you Mike!April S.
Mike Habib - Thank you for being so professional and honest and taking care of my brothers IRS situation. We are so relieved it is over and the offer in compromise process went just as you said. Mike is very professional and will give you honest answers to the OIC process and you can really trust him. You won't be sorry you chose him!Joe and Deborah V.
Mike is a true professional. He really came thru for me and my business. Dealing with the IRS is very scary. I'm a small business person who works hard and Mike helped me see that they are not that scary after all. He was always there with the answers I needed and was very good about calling me back which I appreciated since your first reaction is to freak out and ask a million questions. He solved a messy case and worked very hard to resolve it. His rates are VERY reasonable for the amount of work he does! I give him my highest recommendation!Marcie R.
Mike was incredibly responsive to my IRS issues. Once I decided to go with him (after interviewing numerous other tax professionals), he got on the phone with the IRS immediately (as in the same day I signed with him) to squash an impending issue. And he worked directly with them to quickly come to a resolution I am very happy with. I'd highly recommend reaching out to Mike to see if he can help you with any IRS issues. I'm very satisfied!Marshall W.
I’ve seen and heard plenty of commercials on TV and radio for businesses offering tax help. I did my research on many of them only to discover numerous complaints and unresolved tax issues. I found Mike Habib through my own online search and contacted him. He was very professional with great communication, always answering my questions and concerns. Mike resolved my complicated tax problem just as he said he would. I would definitely recommend his services to family and friends.Nancy & Sal V.
BBB Accredited Business
Trust Link
California Society of Enrolled Agents
Enrolled Agent
Contact Information