Can I still file my own return after the IRS has filed an SFR?

Yes — and you should. You can file your own return at any time to replace the IRS's SFR. The IRS will accept your return, which typically includes deductions and credits the SFR did not, significantly reducing your tax liability. If the SFR assessment has already been finalized, you must file the delinquent return and then request an Audit Reconsideration to have the IRS adjust the assessment. Filing your return before the SFR is finalized is simpler and faster.

Why is an SFR almost always higher than what I actually owe?

The IRS uses only income reported by third parties (W-2s, 1099s) to prepare an SFR. It does not include deductions for mortgage interest, business expenses, medical costs, charitable contributions, dependents, or tax credits. It also uses the least favorable filing status — single or married filing separately — regardless of your actual situation. The result is almost always a tax liability two to three times higher than a properly prepared return.

How long does it take for the IRS to file an SFR?

The IRS typically begins the SFR process approximately 10-12 months after the original return due date, after sending a series of notices (CP59, CP515, CP516, CP518) requesting that you file. The IRS generally goes back no more than five years for SFRs, though it can technically go back further. An SFR assessment becomes final 30 days after you receive the CP2566 Proposed Assessment notice, unless you file your own return or petition the Tax Court.

What is a substitute for return (SFR)?