Internal Revenue Service:

Preparing Substitute for Returns for Individuals

GGD-00-60R: Published: Feb 17, 2000. Publicly Released: Mar 3, 2000.

Additional Materials:

Contact:

James R. White
(202) 512-5594
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO provided information on the Substitute for Return (SFR) program at the Internal Revenue Service (IRS).

GAO noted that: (1) IRS prepares a substitute for return for certain individuals classified as potential nonfilers for whom: (a) it has what it considers to be adequate information about income; and (b) the estimated tax liability is at or above a certain level; (2) IRS receives this income information from third parties who make payments to individuals; (3) IRS believes that potential nonfilers who receive a substitute for return will be encouraged to respond by either filing a more accurate return or showing that they have no filing requirement; (4) IRS is to give the potential nonfilers up to two chances to respond to information showing the proposed amount of the substitute for return; (5) if these individuals do not respond, IRS is to assess the tax shown on the substitute for return and seek payment of the balance due through its regular collection process; (6) IRS can contact potential nonfilers who are not selected for the SFR program to solicit a tax return; (7) these contacts can be made through telephone calls or visits by IRS staff; (8) IRS has a few criteria to guide decisions on whether to create a substitute for return through automated or manual means; (9) IRS is to use the automated method when the sources of income are less complex, such as when they have little or no self-employment income from business activities; (10) the automated method accounts for most substitute for returns; (11) when preparing a substitute for return, IRS allows for a filing status of either "single" or, if the most recently filed return showed the taxpayer as married, "married filing separately"; (12) IRS has always allowed for only these two filing status claims on a substitute for return; (13) IRS cannot use "married filing jointly" because the tax law only allows this filing status when taxpayers elect to use it upon filing a tax return; (14) IRS rarely receives information other than income information from third parties in preparing a substitute for return; (15) a balance-due account created from a substitute for return has no special priority over those created through other means; (16) IRS is to use the same formula to set collection priorities for all types of accounts that involve the collection of unpaid assessments from individuals; (17) IRS does not routinely collect data on the costs to prepare and process substitute for returns and on the impacts of the SFR program on compliance; and (18) IRS does track the number of substitute for returns and whether the taxpayer responds to the notice on the related tax, penalty, and interest assessments.

Dec 16, 2014

Nov 19, 2014

Sep 22, 2014

Sep 18, 2014

Aug 11, 2014

Jul 29, 2014

Jul 22, 2014

Jul 18, 2014

Jul 7, 2014

Jul 2, 2014

Looking for more? Browse all our products here