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A Substitute for Return vs. Filing Your Own

If you do not file, the IRS can file for you. Filing afterwards can change the tax. It does not change the clock.

Quick Answer

Filing your own return after a substitute for return can change the tax. It does not change the clock, and that asymmetry is the part worth knowing. The IRS states it directly: where your later return shows less tax, "we may reduce or reverse your tax due, but the CSED stays the same"; where it shows more, "we'll assess you for the increased tax due. The original CSED stays the same, however, a new CSED is set up for the additional tax due." So a single tax year can end up carrying two collection deadlines. Filing is still usually the first move, because it is a precondition for most of what the IRS offers — the IRS states you must be current on your filings to apply for an installment agreement — and because a substitute for return is computed without whatever would have reduced the tax.

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A substitute for return

Advantages

  • It is not final. The IRS states that if you later file a return it accepts, it may reduce or reverse the tax due where your return shows less.
  • It is preceded by notice. The IRS states it notifies you of tax due, and that assessment follows if you do not respond or if it is upheld in Tax Court.

Disadvantages

  • It is the IRS computing your tax without your deductions or credits.
  • It starts the collection clock. The IRS states that when it assesses the tax, "the 10-year collection period starts".
  • It produces a balance the collection notices then work.
  • Filing afterwards does not undo the clock. The IRS states the CSED stays the same.

Best For

Who filed: the IRS, on your behalf and without your information.

Typical Cost

The IRS publishes no fee attached to either.

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Filing your own return

Advantages

  • It is a precondition for most of the resolution options. The IRS states you must be current on your filings in order to apply for an installment agreement.
  • It can reduce the tax. The IRS states that where your return shows less than the substitute for return, it may reduce or reverse the tax due.
  • It preserves a refund, if the timing allows. The IRS states on LT26 that to receive a refund you must file within three years of the original due date, or two years from the date you fully paid the tax, whichever is later.

Disadvantages

  • Filing after a substitute for return does not reset the collection statute. The IRS states the CSED stays the same.
  • Where your return shows MORE than the substitute for return, the IRS states it assesses the increase and a NEW CSED is set for the additional tax, while the original CSED is unchanged.
  • Late filing has its own penalty, at 5% of the tax due per month or partial month up to 25%.

Best For

Who filed: you, with whatever the return actually shows.

Typical Cost

The IRS publishes no fee attached to either.

The Verdict

Filing your own return after a substitute for return can change the tax. It does not change the clock, and that asymmetry is the part worth knowing. The IRS states it directly: where your later return shows less tax, "we may reduce or reverse your tax due, but the CSED stays the same"; where it shows more, "we'll assess you for the increased tax due. The original CSED stays the same, however, a new CSED is set up for the additional tax due." So a single tax year can end up carrying two collection deadlines. Filing is still usually the first move, because it is a precondition for most of what the IRS offers — the IRS states you must be current on your filings to apply for an installment agreement — and because a substitute for return is computed without whatever would have reduced the tax.

Frequently Asked Questions

Does filing my own return restart the ten years?
No. The IRS states the CSED stays the same where your return reduces the tax. Where it increases the tax, the original CSED is unchanged and a new one is set for the additional amount.
Can a substitute for return be changed?
The IRS states that if you later file a return and it accepts it, and your return shows less tax due than the substitute for return, it may reduce or reverse your tax due.
Why should I file if the IRS already did?
Two reasons the IRS states: the tax may come down, and being current on filings is a condition of applying for an installment agreement. It states so on LT16 and LT75.
What if I am owed a refund for that year?
The IRS states on LT26 that to receive a refund you must file the delinquent return within three years from the original return due date, or within two years from the date you fully paid the tax, whichever is later.

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Sources

Sourced to primary IRS materials and editorially reviewed. Not reviewed by a tax professional. Not tax advice. Report a correction.