DEFINITION of 'Substitute Return'

A tax filing that the IRS will create for a taxpayer in order to preliminarily calculate the tax due, if a taxpayer neglects to file his or her own return. The IRS creates a substitute tax return by using the tax form data that it has received about you from your employer, bank and other sources. Since the tax forms received by the IRS do not include all the relevant tax data, a substitute return will likely be inaccurate and may not reflect all the items of income, deductions and credits that should be on the return.

BREAKING DOWN 'Substitute Return'

The creation of a substitute return is typically done only for taxpayers who are significantly delinquent in filing a return. The substitute return is then used as a basis for imposing penalties, interest charges and initiating collection processes against a taxpayer's wages, bank account and property if the taxpayer is found to owe further taxes. The IRS advises that even if a substitute return has already been created in a taxpayer's behalf, the taxpayer should still file a return so that all of the correct income, deductions and credit items are claimed.

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