DID THE IRS PREPARE YOUR TAX RETURN, A SUBSTITUTE FOR RETURN?
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The IRS Prepared Your Tax Return: What You Need to Know?
Handling your taxes might not always be at the top of your priority list, but it’s one of those tasks that can’t be ignored. If you miss filing your tax returns for a year or more, you might find yourself in a tricky situation where the IRS steps in and files a substitute tax return on your behalf. This can lead to significant issues, as the IRS will use the information they have without looking for the best deductions or write-offs, potentially overstating your tax liability.
Now, while filing your taxes on time every year is the best way to avoid such complications – life happens, and you might fall behind. If you’re dealing with this problem, it’s important to understand how a substitute return works and what steps you can take to address it. Stick with us, and we’ll walk you through everything you need to know to manage this situation effectively.
General Information
Internal Revenue Code 6020(b). Return prepared by the Internal Revenue Service because the taxpayer did not file a tax return.
IRC 6020(b), Substitute for Return Case Processing. The Law and the Authority.
- When a taxpayer refuses to file an employment tax return, the return may be prepared by the Service under the authority of IRC 6020(b) in either of the following two ways:
- Collection personnel prepares a tax return that reflects the proposed tax for assessment under IRC 6020(b) case processing procedures; or
- Compliance personnel, IRS Staffers, generally use “substitute for return” procedures with the proposed tax shown as a liability in the examiner’s report.
- Cases developed under either method may be protested to Appeals.
- A Technical Advisory Unit of the Internal Revenue Service reviewer reviews Area office cases prior to transmitting them to IRS Appeals.
- On all agreed cases Appeals requests that the taxpayer sign the prepared tax return. If the taxpayer agrees to a revised tax, request the taxpayer sign a new return. In either case, the return is marked “Delinquent”.
- Unagreed cases:
- Employment tax cases ( 941, 944 ) cannot be litigated in the Tax Court. Therefore any unagreed employment tax case is assessed without issuing of a notice of deficiency. The proposed tax return prepared by the originating office, or a revised tax return prepared by the IRS Agent is processed for assessment.
- The IRS Agent signs, dates and prints his/her title on the “Date, Signature and Title” line of the return. The following statement is typed or printed below the signature:”This return was prepared and signed under the authority of Section 6020(b) of the Internal Revenue Code”. The person signing this tax return must have the authority to prepare such a tax return. The authority is not given to a lower GS personnel. For information on application of the failure to file and failure to pay penalties, see IRM 20.1.2, Failure to File/Failure to Pay Penalties.
Under the Internal Revenue Code, the IRC 6020(b) provides a way to prepare returns and secure assessments from non-filing taxpayers who:
- Have an open filing requirement
- Do not file a return as required
- After receiving letters from the Internal Revenue Service, failed to reply to the Services request to file tax returns
How and why does the Internal Revenue Service process Business Returns IRC 6020(b), when the taxpayers have failed to file:
- Internal Revenue Code 6020(b) is the authority given to the Commissioner of the Internal Revenue Service to prepare and process returns for non-filing business taxpayers.
- Delegation Order No. 182 (Rev. 7), extends 6020(b) authority to Internal Revenue Agents; Tax Auditors; Revenue Officers, GS-9 and above; Collection Support Function Managers, GS-9 and above; Automated Collection Branch Unit Managers, GS-11 and above; Customer Service Collection Branch Managers, GS-10 and above; and Tax Resolution Representatives, GS-9 and above.
Understanding the Substitute for Return Process
Why the IRS Might Prepare Your Tax Return?
- Missing Return: The IRS has information about your income, such as W-2 forms or 1099s, but hasn’t received your tax return. This could be due to failure to file or the IRS being unable to locate your return. The IRS check tax return status regularly to identify any missing returns.
- Unclaimed Credits or Deductions: If you’re eligible for tax credits or deductions that you haven’t claimed, the IRS may prepare your return to ensure you receive these benefits and avoid underpayment of taxes.
To handle these issues, you might want to get help from an IRS consultant. They can give you expert advice to make sure your returns are correct and complete.
Also, be aware of actions like an IRS bank levy or an IRS final notice, which can have serious financial effects if ignored. Mr. Michael Sullivan can help you with these challenges. Contact us today to ensure your tax problems are handled smoothly and professionally.
How to Review the IRS-Prepared Return?
- Income Reported: Verify that all your income sources, such as wages, interest, and dividends, are accurately included.
- Deductions and Credits: Check that the IRS has claimed the appropriate deductions and credits you’re eligible for, like the standard deduction, charitable contributions, or the Earned Income Tax Credit.
- Tax Calculations: Ensure the tax liability and any payments or refunds are calculated correctly.
DID THE IRS PREPARE YOUR TAX RETURN, A SUBSTITUTE FOR RETURN?
Addressing Discrepancies in the IRS-Prepared Return
- Submitting Your Own IRS Tax Return: Provide the IRS with the correct information and supporting documentation to ensure your tax situation is accurately represented.
- Understanding the Non-Final Nature of the IRS Return: The IRS-prepared return is not final. By submitting your own return, you can correct any issues and avoid potential penalties, interest charges, and ongoing tax problems.
Next Steps After Receiving an IRS-Prepared Return
- Accept the IRS-Prepared Return: If you agree with the SFR, sign and submit it.
- File Your Own IRS Tax Return: If you disagree with the SFR, file your own return with the correct information to claim missed deductions or credits.
- Request an Administrative Appeal: If you still disagree after filing your own return, request an administrative appeal to provide additional documentation and argue your case.
In these situations, getting help from professionals like Mr. Michael Sullivan, who specialize in IRS-related matters, can be very helpful. He can guide you through the process and make sure your tax issues are correctly handled.
Plus, he offers additional services such as IRS debt settlement to reduce your overall tax burden, tax lien release to remove liens from your property, and innocent spouse tax relief to protect you from liabilities related to your spouse’s tax issues. If you need assistance, our team is here to help. Get in touch now.
Logistics of 6020(b) Processing
- The entity appears to be liable for the return
- The person required to file the return does not file it
- Attempts to secure the returns fail
The following Business returns are the returns usually prepared under the provisions of IRC 6020(b):
- Form 941 Employers Quarterly Federal Tax Return
- Form 940 Employer’s Annual Federal Unemployment tax Return
- Form 720 Quarterly Federal Excise Tax Return
- Form 944 Employer’s Annual Federal Tax Return
These 6020 (B) are usually processed out of the Ogden Utah IRS Campus. The returns are usually processed for a period of 3 back tax years. There is an undisclosed dollar criteria that the IRS will not process. These dollar amounts are kept under wrap and key but guesses are cases under $10,000 may not be brought out to the field because of a risk reward basis.
Federal and State Information Sharing Agreements
- Different government Agencies between the Federal and State share agreements. They share the information regarding 6020(b) assessments. Agreements usually require the sharing of information as tax returns are assessed.
- Be careful of unauthorized taxpayer information disclosures which will occur if you give more information than the Federal and state agreement specifies to share with the taxpayers’ state of residence. With the new age of computer share and computer mapping techniques available this sharing of information will be very prominent as we march forward into the computer technology age. These programs have existed for years but these matching programs are going to rake in billions of dollars over time.
- If these agreements are active, maintain the integrity of the agreement by:
- Sharing weekly information regarding return assessments using information from the A6020b system
- Providing information specified in the agreement and requested by your federal/state coordinator
We can stop the IRS today, call us at 1 (877) 367-7870 . Let our tax team of Board Certified Tax Attorneys, CPA’s and former IRS Agents, Managers and Instructors get the tax justice for you.
- If IRS filed a substitute tax return for you, we can help!
How IRS Substitute for Return Process Work?
Initial Notification from the IRS
The IRS will notify you that they haven’t received your tax return for the applicable year(s) by sending a letter proposing a tax liability assessment based on your income, including penalties and interest. You have 30 days to:
- Submit a completed 1040 form
- Provide a signed Consent to Assessment and Collection form
- Send a letter explaining why you are not required to file
Statute Notice of Deficiency (SND) from the IRS
If you don’t respond within 30 days, the IRS will send a Statute Notice of Deficiency (SND), or 90-day letter, which:
- Informs you that the IRS is assessing the tax owed along with penalties and interest
- Advises you of your right to appeal to the U.S. Tax Court
Steps in the Dispute Process
After receiving the SND, you have 90 days to dispute the proposed amount. During this period, you should check your IRS tax return status frequently to stay updated on any changes or additional notices. If you don’t respond, the IRS can assess taxes and begin collection efforts, such as liens, levies, and garnishments.
For those who are dealing with these complex tax issues, seeking help can be invaluable. Professional assistance from Michael Sullivan can guide you through the process, ensuring your response is timely and effective
Michael Sullivan offers a range of other services too to help you manage and resolve your tax issues. Whether you need IRS tax debt settlement help or unfiled taxes help, our team is here to provide the support you need. Reach out now.
How the IRS Gathers Information for Your Substitute Return?
- W-2 Forms: Reporting wages, salaries, and tips from your employer.
- 1099 Forms: Reporting various types of income other than wages, such as interest, dividends, and self-employment income.
- Third-Party Sources: Such as employers and financial institutions that provide information about taxable transactions.
The substitute return typically allows only the standard deduction, one exemption, and a single or married filing single status. Once prepared, the IRS will notify you by mail and ask for your consent to the proposed return.
Internal Revenue Code 6020(b) Explained
How IRC 6020(b) Case Processing Works?
If you find yourself wondering, What happens if the IRS prepared my tax return? It’s important to understand IRC 6020(b). This code allows the IRS to prepare a tax return when a taxpayer refuses to file an employment tax return. This can be done in two ways:
- Collection Personnel: They prepare an IRS tax return reflecting the proposed tax for assessment.
- Compliance Personnel: They use “substitute for return” procedures to show the proposed tax as a liability.
Appeals and Reviews of Substitute Returns
This section involves the steps the IRS takes to review and possibly contest the substitute return:
- Technical Advisory Unit: This unit reviews cases before sending them to IRS Appeals to ensure accuracy and compliance.
- Agreed Cases: If the taxpayer agrees with the prepared or revised return, they must sign it, and it is marked “Delinquent.”
- Unagreed Cases: Employment tax cases that cannot be litigated in Tax Court are assessed without issuing a notice of deficiency.
Authority and Signature Requirements for Substitute Returns
Only specific IRS personnel are authorized to prepare and sign returns under IRC 6020(b). The IRS agent must:
- Sign and date the return.
- Include a statement confirming their authority to prepare the return under IRC 6020(b).
How and Why the IRS Process Business Returns Under IRC 6020(b)?
- Authority: IRC 6020(b) provides the Commissioner of the IRS the authority to prepare and process returns for non-filing business taxpayers.
- Delegation of Authority: This authority extends to Internal Revenue Agents, Tax Auditors, Revenue Officers (GS-9 and above), Collection Support Function Managers (GS-9 and above), Automated Collection Branch Unit Managers (GS-11 and above), Customer Service Collection Branch Managers (GS-10 and above), and Tax Resolution Representatives (GS-9 and above).
Common Business Returns Processed Under IRC 6020(b)
- Form 941: Employers Quarterly Federal Tax Return
- Form 940: Employer’s Annual Federal Unemployment Tax Return
- Form 720: Quarterly Federal Excise Tax Return
- Form 944: Employer’s Annual Federal Tax Return
These returns are usually processed out of the Ogden, Utah IRS Campus and typically cover a period of three back tax years. There is an undisclosed dollar criterion that the IRS will not process, but it is speculated that cases under $10,000 may not be brought out to the field due to a risk-reward basis.
Understanding Federal and State Information Sharing Agreements for Tax Assessments
- Unauthorized Disclosures: Be careful of unauthorized taxpayer information disclosures which can occur if you give more information than the Federal and State agreement specifies to share with the taxpayer’s state of residence. With the new age of computer sharing and mapping techniques, this sharing of information will become very prominent, generating billions of dollars over time.
- Maintaining Agreement Integrity: If these agreements are active, maintain the integrity of the agreement by:
- Sharing weekly information regarding return assessments using information from the A6020b system.
- Providing information specified in the agreement and requested by your federal/state coordinator.
Avoiding Future Surprises with IRS-Prepared Returns
To prevent the IRS from preparing your tax return in the future, make sure to file your IRS tax returns on time each year, accurately report all your income sources, claim all eligible deductions and credits, and respond promptly to any IRS notices or requests for information. Regularly monitoring your IRS tax return status can help you stay proactive and avoid potential problems.
If you need assistance, our team of certified tax attorneys, CPAs, IRS tax consultant, and former IRS agents is here to ensure your taxes are accurately filed and represented.