What's a substitute for return?

A substitute for return, often shortened to SFR, is a return the IRS can prepare when someone doesn't file. It sounds helpful, but it usually isn't the best outcome for a freelancer.

This page is general information, not tax advice. Everything about how the IRS handles substitute returns comes from the IRS's own pages, linked below.

What the IRS says it is

On its page about filing past due tax returns(IRS.gov), opens in a new tab, the IRS says that if you fail to file, it may file a substitute return for you, and that this return might not give you credit for deductions and exemptions you may be entitled to.

For freelancers, that matters. Your 1099s show what clients paid you, but your business costs (software, equipment, a home office, mileage and so on) only count if you claim them on a return you file.

What usually happens next

The same IRS page explains that it sends a Notice of Deficiency, CP3219N, proposing a tax assessment. It says you then have 90 days to file your past due return or file a petition in Tax Court, and that if you do neither, it proceeds with the proposed assessment. An unpaid assessment can lead to collection action.

If you have a letter and you're not sure what it is, the IRS has a page for understanding your IRS notice or letter(IRS.gov), opens in a new tab where you can look up the code printed on it.

Filing your own return

The IRS also says that even after it files a substitute return, it is still in your best interest to file your own return so you can claim the credits and deductions you are entitled to, and that it will generally adjust your account.

Getting help

Dates on these letters matter, so many people choose to talk to a licensed tax pro quickly. BackYears can introduce you to a vetted CPA, Enrolled Agent or tax attorney who catches people up for a flat price. We don't prepare returns or give tax advice ourselves.