CARL WATTS & ASSOCIATES

September 30, 2013

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There are at least three different tax related usages of the term substitute which may seem similar but in fact refer to different IRS procedures.

You are familiar by now with Form 4852 from our previous newsletter. Form 4852 is a Substitute for Form W-2 or Form 1099-R in case you didn’t receive them or they were incorrect. The IRS will provide you this form together with a letter of instructions and you can use the information to fill out and file your tax return.

A substitute tax form is a tax form (or related schedule) that differs in any way from the official version and is intended to replace the form that is printed and distributed by the IRS.

The Service provides guidance for the approval and acceptance of computer-prepared and computer-generated
tax forms that are filed by individual taxpayers and tax practitioners.


In other words, if you want, you are allowed to produce your own version of a tax form. For this you should first obtain a copy of IRS Publication 1167, General Rules and Specifications for Substitute Forms and Schedules. This document describes the general requirements for designing and submitting all such forms for approval and is updated annually to coincide with the current tax year.


The IRS has issued earlier this year Revenue Procedures 2013-17 containing general requirements and conditions for the development, printing, and approval of all substitute tax forms to be acceptable for filing in lieu of official IRS-produced and distributed forms.

The IRS accepts quality substitute tax forms that are consistent with the official forms and that do not have an adverse impact on processing. The IRS Substitute Forms Program administers the formal acceptance and processing of these forms nationwide.

While the program deals primarily with paper documents, it also interfaces with other processing and filing media, such as electronic filing. Only substitute forms conforming with these requirements will be accepted.

The following types of forms are covered by this revenue procedure:

  • IRS tax forms and their related schedules,
  • Worksheets as they appear in instruction packages,
  • Applications for permission to file returns electronically and forms used as required documentation for electronically filed returns,
  • Powers of Attorney,
  • Over-the-counter estimated tax payment vouchers, and
  • Forms and schedules relating to partnerships, exempt organizations, and employee plans.
Substitutes and the IRS
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The Substitute Forms Unit (the Unit) will email confirmation, as much as possible, of receipt of your forms submission. Your submission can be considered approved if you do not receive a response from the Unit within 20 business days of the receipt date. If the Unit anticipates problems in completing the review of your submission within the 20 business day period, the Unit will send an interim email notifying you of the extended period for review.

Once the substitute forms have been approved by the Substitute Forms Unit, you can release them after the final versions of the forms have been issued by the IRS. Before releasing the forms, you are responsible for updating forms approved as draft and for making form changes as requested.


You may have also encountered the term substitute for return.

The IRS has the authority to prepare and file a Substitute for Return (SFR) on your behalf.

A substitute return is usually done only for taxpayers who are significantly delinquent in filing a return. The SFR is an IRS estimate of taxes owed and is often greater than the actual tax liability. Once the IRS files the tax assessment on the SFR, they can legally begin serious collection action.

If the IRS must file an SFR for a delinquent taxpayer, it will be prepared in the best interest of the government. Taxpayers are given only one personal exemption, zero dependents, and the standard deductions.

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.

Before signing or agreeing to anything, consult with a tax professional who can advise you of your options. You may need assistance filing past due returns to replace the SFR‘s, disputing the amount of the back tax debt, proving you are not liable for the tax debts, or qualifying
for a tax debt relief program.

Once again, it stands to logic that help from tax professionals can turn out to be invaluable whenever you have to deal with taxes and the IRS.