If you haven't filed a tax return in a few years, you may still owe the IRS. You may have even been suprised when you received a Balance Due Notice in the mail from the IRS for years you haven't filed.
The reason for this is the SFR. An SFR stand for Substitute for Return. When you go more than 2 years without filing a return, the IRS might prepare a return for you. They will file you single with standard deductions. You will not get any other deductions that might be beneficial to you. Once they prepare a return for you and you owe tax, they will file that return and assess the tax against you. If they prepare a return for you and you are due a refund, they will not file that return. Thus, you will not get your refund. It is not in the best interest of the Treasury to hand out money on returns not filed by the tax payer.
Once your tax has been assessed, they will put you in the collections letter cycle.
Even though you have a SFR, you can still file a return on top of it with all of your deductions included and you correct filing status. This will file over the SFR and adjust your tax liability, but it will take months to process, so in the meantime, you need to be in a resolution with your supposed liability or the IRS will enforce collections (even if your return shows you don't owe). Doesn't seem fair but that's the way it is.
This is one of those areas where professional representation might be your best bet. It is very tricky when filing over SFRs and when filing old returns. If your returns don't match up to IRS records, you will be red-flagged for an audit for sure, delaying the whole process and even resulting in more penalties.
Showing posts with label substitute for return. Show all posts
Showing posts with label substitute for return. Show all posts
Friday, August 8, 2008
Thursday, July 24, 2008
Taking Care of Your IRS Problem
When you owe the IRS, or are behind in filing your tax returns; there are three things you can do.
The first is to do nothing and let the IRS enforce collections and take care of your problem for you. This is never a good idea. Although the IRS can prepare and file a return for you, known as a substitute for return or SFR, they will prepare it in the best interest of the treasury. Meaning, they will not take into account any deductions you may be able to take advantage of, and then they will assess a tax liability against you. This will put you into the collections process; mandating that you take action or have the full collection forces of the IRS come after you.
The second thing you can do is handle it yourself. This is also not a good idea. Unless you know how the IRS works and what options are available for you, you will never know if you have gotten the best deal that is available for you. It is not the IRS’s job to get you into your best possible result, it is their job to collect from you. AND it is never a good idea to prepare your own tax return. Always have a professional do it for you so that you can be sure to take advantage of all possible deductions you may have and to avoid costly mistakes and errors that can cause you many many headaches.
The Third and best way to handle your situation is to hire a reputable tax resolution firm. They will know how the IRS works, what options are available to you and get you the best result possible. You wouldn't go to court without a lawyer would you? So why would you want to face the largest bill collector on your own. A reputable firm will have your best interest in mind. Have great communication with clients, have great customer satisfaction scores and deliver what they promise.
You always want to be proactive with the IRS and deal with them on your own terms.
Coming soon: How to know your tax resolution firm is reputable.
The first is to do nothing and let the IRS enforce collections and take care of your problem for you. This is never a good idea. Although the IRS can prepare and file a return for you, known as a substitute for return or SFR, they will prepare it in the best interest of the treasury. Meaning, they will not take into account any deductions you may be able to take advantage of, and then they will assess a tax liability against you. This will put you into the collections process; mandating that you take action or have the full collection forces of the IRS come after you.
The second thing you can do is handle it yourself. This is also not a good idea. Unless you know how the IRS works and what options are available for you, you will never know if you have gotten the best deal that is available for you. It is not the IRS’s job to get you into your best possible result, it is their job to collect from you. AND it is never a good idea to prepare your own tax return. Always have a professional do it for you so that you can be sure to take advantage of all possible deductions you may have and to avoid costly mistakes and errors that can cause you many many headaches.
The Third and best way to handle your situation is to hire a reputable tax resolution firm. They will know how the IRS works, what options are available to you and get you the best result possible. You wouldn't go to court without a lawyer would you? So why would you want to face the largest bill collector on your own. A reputable firm will have your best interest in mind. Have great communication with clients, have great customer satisfaction scores and deliver what they promise.
You always want to be proactive with the IRS and deal with them on your own terms.
Coming soon: How to know your tax resolution firm is reputable.
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