Chicago IRS Tax Attorney

Chicago Tax Team - We help business professionals solve their IRS problems - FOREVER!

Call Us 312-664-6649
Free Consultation
  • IRS Radio Hour
    • IRS Radio Hour Show – 8/31
    • IRS Radio Hour Show – 8/23
    • IRS Radio Hour Show – 8/17
    • IRS Radio Hour Show – 8/10
    • IRS Radio Hour Show – 8/03
    • IRS Radio Hour Show – 7/27
    • IRS Radio Hour Show – 7/13
    • IRS Radio Hour Show – 7/06
    • IRS Radio Hour Show – 6/29
    • IRS Radio Hour Show – 6/22
    • IRS Radio Hour Audio
      • IRS Radio Hour – 6/15
      • IRS Radio Hour – 6/08
      • IRS Radio Hour – 6/01
      • IRS Radio Hour – 5/25
      • IRS Radio Hour – 5/18
      • IRS Radio Hour – 5/11
      • IRS Radio Hour – 5/04
  • Services
    • Tax Preparation
    • Tax Resolution
      • IRS Installment Agreement
      • IRS Currently Not Collectible
      • IRS Offer in Compromise
      • IRS Penalty Abatement
      • Presidential Tax Resolutions Timeline
    • Bankruptcy
      • Chapter 7
      • Chapter 13
    • Foreclosure Defense
  • About Us
    • Why Us
  • Testimonials
  • Today’s Tax Talk
    • Steven Leahy – Legal Questions Answered
  • Contact Us

Can My IRS Debt be Reduced? – SFR Returns

June 12, 2014 by admin

Steven A. Leahy

Can My IRS Debt be Reduced? – SFR Returns

By Steven A Leahy

One of the first questions IRS clients ask me is “Can you reduce my IRS Debt?” The answer to that question is – sometimes.

Many of my clients are non-filers. That means they haven’t filed their tax returns in some time. If a tax return has not been filed, the IRS will often file the return for the taxpayer. However, when the IRS files a return they don’t include any exemptions or deductions. This kind of return is called a Substitute for Return (SFR). The purpose of the SFR is to prod the taxpayer to voluntarily file a return, or, if a voluntary return is not forthcoming, determine the tax, interest and penalties based upon the information the IRS has.

Usually, the SFR greatly exaggerates the actual amount of tax due. Often, the SFR involves a tax period where an important economic event occurs – a house is sold, some stocks are sold, or some other valuable asset is sold. Because the taxpayer failed to file a tax return, the SFR will include the value of the sale, but will not include a deduction for the basis of the asset – the amount the taxpayer paid for the asset in the first place.

For example, if I purchase stocks for $75,000.00, and later sell the stocks for $76,000.00, the profit on the stock is $1,000.00. The purchase price on the stocks, $75,000.00, is my basis. If the basis is not deducted from the sale price, as happens in an SFR, I will be taxed on the full sales price, $76,000.00. Filing my own return, and deducting the basis from the sale price, would result in a tax on the profit of $1,000.00. The SFR will result in a substantial tax obligation; a voluntary tax return will not.

I have had clients assessed taxes of $100,000.00 and more, much more, for a single year because the IRS completed an SFR for the unfiled returns. In one case in particular, the client sold a house. The sale price of the house was included as income on the SFR, resulting in a tax obligation of more than $220,000.00. The client had not filed in nine (9) years. Our client received notices of collection efforts by the IRS, including threats of levies. We held the IRS at bay while we completed our investigation and the delinquent returns. In the end, the client actually received a refund. The process took many months to complete – but there was a bright outcome.

Not filing returns may also result in other consequences. For example, an SFR does not trigger the running of the statute of limitations or the 3-year period of assessment. So, there isn’t a time limit on how long the IRS can collect on that IRS debt or reassess new taxes. That is never a good thing.

There are other techniques to reduce an IRS debt, including a penalty abatement and investigative audits. I will explore these techniques in future blog posts.

So, if you have unfiled returns, you should consult with a local attorney who may be able to reduce your IRS debt. Before you do anything, you should give me a call. We can discuss your options, complete your delinquent returns and perhaps reduce your IRS debt. – Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Filed Under: Uncategorized Tagged With: “Owe Taxes”, back taxes, Chicago Tax Help, Help With IRS, IRS Levy, IRS Lien, irs options, IRS Options Help, IRS problem, IRS Tax Debt, Offer in Compromise IRS, Tax Debts, Tax Help Chicago, tax options Chicago, Tax Problem Help, tax resolution, taxes and bankruptcy

Listen to the PodCast!

IRS Radio Hour

Sunday at 5:00 pm
AM 560 The Answer
LISTEN HERE

Our Resources

  • Learn about Chicago Tax Resolution Law Firm »
  • Learn About Bankruptcy Chapter 7 »
  • Look at our blog for more information »
  • Expert IRS Tax Problems - How to Solve »
  • Timeline on IRS Tax Resolutions »
  • 
  • 
  • 
  • 
  • 

Testimonials

Our Office

Our Office has represented Clients throughout Chicago & Northern Illinois. We represent many clients from Cook County; however, we have represented clients from:

DuPage County
Kane County
Kendall County
Grundy County

Lake County
McHenry County
Will County
LaSalle County

We have helped taxpayers in Wisconsin, California, Tennessee, and perhaps your state. No matter where you call home, we look forward to your telephone call for your FREE consultation.

2525 Waukegan Road * Suite 210 * Bannockburn, Illinois 60015
Telephone: (312) 664-6649

Opem Tax Advocates, The Law Office of Steven A. Leahy, PC, Attorneys & Lawyers  Bankruptcy, Chicago, IL

Disclaimer - Privacy Policy

All text and design is copyright © 2021 Opem Tax Advocates, LLC. All rights reserved