What an IRC 6020(b) return is
IRC 6020 has two halves. Under 6020(a), if a person fails to file but consents to disclose the information needed, the IRS may prepare the return, and once the taxpayer signs it, it is received as the taxpayer's own return. Under 6020(b), if a person fails to make a required return “or makes, willfully or otherwise, a false or fraudulent return, the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise.” A return the IRS makes and subscribes under 6020(b) is “prima facie good and sufficient for all legal purposes.”
In practice the IRS does not prepare a signed Form 1040 for a nonfiler. It posts a dummy return (a TC 150 with zero tax) to open the module, proposes an assessment computed from information returns and, if nothing changes, assesses it by default. The dummy posting alone is not the 6020(b) return: “The mere filing of a substitute for return (SFR), a "dummy" return to establish the account module does not qualify as a return under IRC 6020(b).” What makes the package a 6020(b) return is Form 13496, IRC Section 6020(b) Certification, signed by an employee and combined with the report or proposal. The certification matters for the failure-to-pay penalty, which IRC 6651(g) lets the IRS impose on a 6020(b) return; the IRM says it exists “to ensure the application of the failure to pay penalty is upheld by the courts.”
Deficiency procedures apply. The entire proposed tax is a deficiency, so the IRS must issue a notice of deficiency before assessing unless the taxpayer consents: “Statutory Notices of Deficiency are issued under authority of IRC 6212.”
Two programs: ASFR and Examination SFR
Two different IRS functions prepare substitutes for return, and they leave different fingerprints on the account.
| ASFR (Collection) | SFR (Examination) | |
|---|---|---|
| Who runs it | SB/SE Compliance Services Collection Operation (CSCO), Austin, Brookhaven and Fresno campuses, under IRM 5.18.1 | Field and office examiners under IRM 4.12.1 and 4.4.9 |
| How the case arrives | Systemically from Taxpayer Delinquency Investigation (TDI) inventory, or referred from ACS or Field Collection; collection assignment code 8000 | Nonfiler leads worked by an examiner, or a return delinquency referral |
| Dummy TC 150 | DLN with Julian date 887 and the literal SFR on the module | DLN with Julian date 888 (IRM 5.18.1.9.2 says a Julian date of 888 is an Examination SFR, not ASFR) |
| Letters | Letter 2566 / CP2566 (30 days), then CP3219N (90 days) | 30-day letter with an examination report, then a statutory notice of deficiency |
| Where a late return goes | ASFR unit by file location code (table below) | The examiner or group that controls the case |
ASFR is a volume program with hard selection rules. Under IRM 5.18.1.3.2 a module qualifies only if it is not older than five years before the current processing year, information return (IRP) data exists, the IRP documents number 60 or fewer, there are no -V, -W, -L, -Z or Z- freezes, no related balance-due module is in a status above 12, and the selection code is not a Criminal Investigation, international or IRS employee code. The dollar thresholds are redacted in the public IRM. Refund Hold cases are ordered first. For everyone else, “ASFR works only 1 module per taxpayer” and suspends the other unfiled years in Status 734, which is why a client with four unfiled years usually receives a CP2566 for one of them; assistors are told to warn that “there are other unfiled years that may be enforced at a later date.” Examination SFRs arise when an examiner works a nonfiler who “refuses or is unable to file”; the examiner can interview and verify income with payers, and the deficiency and statute rules are the same.
How the proposed tax is computed
The ASFR proposal is built entirely from third-party data and a handful of defaults. Understanding them tells you how much a filed return will change the number.
- Income. Every IRP document attached to the TIN (W-2, 1099-NEC, 1099-K, 1099-B, 1099-R and the rest) is added to income in full; 1099-B gross proceeds carry no basis. Employees delete an item only “when the payee name line(s) is obviously not the taxpayer,” and a Payer Agent list flags employers known to file bad data.
- Filing status. “ASFR only uses filing statuses of single or married filing separately when preparing a proposed assessment for the 30-Day Letter.” A married client who would file jointly, or a client who qualifies for head of household, is computed at a higher rate than the law requires.
- Deductions. Only the standard deduction. Mortgage interest on a Form 1098 is not allowed “unless the taxpayer submits a signed return electing to itemize deductions.”
- Business expenses. None. IRM 4.12.1.25.2 (revised November 2025): “The IRS has no legal requirement to allow business expense deductions, including cost of goods sold, on a substitute for return (SFR) prepared under IRC 6020(b),” and “Industry averages and estimates should never be used in calculating an SFR tax liability.” A client with 1099-NEC income is taxed on gross receipts with full self-employment tax.
- Credits and dependents. Not allowed. IRM 4.12.1.25.4: “Deductions and credits (e.g., a Qualified Business Income (QBI) deduction, Child Tax Credit, etc.) will not be allowed on a substitute for return (SFR) prepared under IRC 6020(b).” Only withholding and other prepaid credits shown on the IRP documents are applied.
- Penalties and interest. Failure to file under IRC 6651(a)(1), failure to pay under 6651(a)(2) and the estimated tax penalty under IRC 6654 are computed into the proposal. “ASFR systemically calculates tax, penalties and interest to 28 days from the issuance date of the 30-day letter.”
Under IRC 6201(d) the IRS must verify an information return with the payer only when the taxpayer reasonably disputes it and has cooperated; a nonfiler who does not respond “has not reasonably disputed the receipt of income reported on the IRP document.” A specific, documented dispute of a particular 1099 is what triggers verification. On the payer side, a 1099 issued under the wrong TIN becomes someone else's ASFR; see 1099 corrections and IRS TIN matching.
The letters and the clocks they start
Letter 2566, the 30-day letter (notice CP2566). ASFR generates the 30-day letter with the proposed computation, the IRP income listing and a response form; by the date on the notice, “you can either file your return or accept and pay our proposed amount due.” A Letter 2566R goes out instead when a refund on another year is being held under the Delinquent Return Refund Hold program. If a Form 2848 is recorded to ASFR, “a duplicate 30-Day Letter is systemically addressed and mailed to the POA.” See the CP2566 page.
CP3219N, the statutory notice of deficiency (90-day letter). If the response is missing or insufficient when the suspense ends, ASFR generates the notice of deficiency, “fully automated” and “sent by certified mail,” with 90 days (150 outside the country) to petition the Tax Court; the petition deadline calculator computes the last day. Two points from the ASFR phone script: “an extension cannot be granted once the 90-Day Letter has been issued,” and “filing with the IRS does not extend the period for petitioning.” If the client petitions, “the ASFR function will no longer handle the case”; see petitioning the Tax Court and the CP3219N page.
A return filed in response to a CP3219N is normally accepted and assessed as filed, and the IRS says it will do so. But the only thing that preserves the right to contest the deficiency in court is a timely petition. If the return will not be processed before the 90 days run, and the client disputes the proposed income, the two deadlines have to be managed together.
The default assessment
When the 90-day suspense ends with no return and no petition, ASFR requests a default assessment. IRM 5.18.1.9.2.1.2 lists the transactions that identify one: the dummy TC 150, TC 494 (notice of deficiency issued) and TC 495, a TC 290 tax assessment, and TC 599 with closing code 088. The Form 13496 certification “is also included in every default assessment source document.” The default carries the failure-to-file, failure-to-pay and estimated tax penalties from the proposal plus interest from the original due date, and moves into the normal collection stream. A client who ignored the letters typically surfaces when a final notice of intent to levy arrives, with an assessment well above what a filed return would show.
An agreed response is the other route to assessment: a signature on an unaltered consent (a representative's only if the CAF shows authority to sign) with the box checked agreeing to the amount. “The taxpayer may no longer make changes to filing status, add spouse or dependents on a signed waiver, they must file a return.” A consent is also not a return for statute purposes (next section), so it is rarely the better choice for a client with any deductions, credits or a different filing status.
ASED, CSED and RSED after an SFR
The statute rules are where practitioners most often misjudge an SFR year.
- Assessment statute. An SFR does not start the three-year assessment period. IRM 25.6.1.9.4.5: a processed 6020(b) return “does not start the period of limitations for assessment per IRC 6501(b)(3),” and ASFR's manual agrees: “ASFR default assessments and the ASFR dummy TC 150 do not start the running of the ASED.” The year stays open until the taxpayer files; then “The assessment statute period for that tax year will begin with the received date of the taxpayer's signed return.” A signed waiver or consent “does not constitute a return under IRC 6020(a)” (the IRM cites Rev. Rul. 2005-59). See the assessment statute.
- Collection statute. The default assessment date starts the ten-year collection period. A later reconsideration does not restart it: “Do not extend or re-compute the CSED on ASFR Reconsiderations,” and reconsiderations “should be processed even if the CSED which is based on the default has expired.” See the CSED.
- Refund statute. This is the trap. An ASFR return or reconsideration is an original return, so withholding and other prepaid credits are refundable only if the return is received within three years of the due date (plus extensions). IRM 5.18.1.9.2.3.16.1: “if an ASFR return or Reconsideration is received more than three years from the due date with regard to extensions, a refund of prepaid credits should not be made.” Payments made within three years of the received date remain refundable. “Do not allow any overpayment of prepaid credits or subsequent payments to refund or offset if the RSED has expired.” A client who files a 2021 return in 2026 to replace an ASFR default gets the tax corrected, but withholding in excess of that tax is lost and cannot be applied to another year. Use the statute date calculator for the RSED, and see refund claims and the lookback.
Responding: return, consent, explanation or petition
The response options are the same at the 30-day and 90-day stages, with the petition added at the 90-day stage.
- Pull the transcripts first. The wage and income transcript shows every IRP document ASFR used; the account transcript shows where the case is (TC 971 AC 143, ASFR started; TC 494, notice of deficiency out; TC 290 with TC 599 cc 088, default assessed). See reading an account transcript.
- File the actual return. The IRS notice pages say a return for one of the last two years may be e-filed; otherwise the signed paper return goes with the response form in the envelope provided. If the envelope is gone, IRM 5.18.1.9.2 gives the addresses by the file location code (FLC) in the TC 150 or TC 971 AC 143 DLN: FLC 18, Internal Revenue Service ASFR Unit, P.O. Box 149338, Austin, TX 78714-9338; FLC 19, P.O. Box 9013, Holtsville, NY 11742-9013; FLC 89, P.O. Box 24015, Fresno, CA 93779-4015 (with separate street addresses for private delivery). Both spouses sign a joint return. Include the IP PIN if the client has one. The Document Upload Tool is also accepted wherever the IRM allows fax, when an employee gives the client an access code.
- Or explain why no return is required. If the IRP income is not the client's (identity theft, a 1099 to the wrong TIN, income already reported on a joint return under the spouse's SSN), say so in writing with the documents. Identity theft claims need Form 14039; ASFR suspends for the substantiation only before the 90-day letter issues.
- Or petition. At the 90-day stage, a petition is the only way to keep the dispute out of assessment; small case procedures apply at $50,000 or less per year.
- Address penalties with the return. Penalties are assessed on balance-due ASFR and reconsideration returns “unless the penalties are waived or abated due to establishment of Reasonable Cause, First Time Abatement, Statutory Exceptions, Administrative Waivers or Correction of Service Error.” A First Time Abate or reasonable cause request can accompany the return.
Returns filed before the default (ASFR returns) are shipped to a submission processing site and must be processed within 45 days of the IRS received date. Returns filed after the default are ASFR Reconsiderations, discussed next.
Reconsideration after the default
An original return filed after an ASFR default is an “ASFR Reconsideration.” It is screened by clerks using the transaction-code test above, batched by received date, and must be worked within 60 days: “All ASFR Reconsideration returns must be worked within 60 days of the IRS received date.” Two protections attach on receipt. Enforcement stops: “Collection and Enforcement must be suspended upon receipt of an ASFR Reconsideration,” implemented by a TC 470 with closing code 93 (not input if the account is already in status 12, 60, 71 or 72). And the return is treated as an original return, so the tax is recomputed from scratch rather than treated as a claim against the default.
What a reconsideration cannot do:
- Recover prepaid credits once the RSED has passed (see above).
- Change a year covered by an accepted offer in compromise. The IRM has employees write back that “we cannot change the amount of assessment on a tax period where an Offer-In-Compromise has been accepted.”
- Reach back to the Tax Court. A defaulted notice of deficiency is final as to deficiency jurisdiction; the remedies are administrative reconsideration, or payment and a refund claim followed by a refund suit.
A joint reconsideration return on which the ASFR taxpayer is the secondary spouse goes to submission processing, and the default is reversed when the return posts under the primary SSN. A reconsideration for an examination SFR goes to the examination function as an audit reconsideration. If the client owes on the corrected return, an installment agreement can follow as soon as it posts.
Questions practitioners ask
The client got a CP2566 for 2022 but has not filed 2021, 2023 or 2024 either. What happens to those years?
ASFR works one module per taxpayer unless a refund is being held, and suspends the related years in Status 734. Filing all of them at once is the way to prevent a second cycle of letters, and the ASFR phone script tells assistors to ask for every open year while the taxpayer is on the line.
Can I get the IRP data ASFR used?
Yes. The 30-day letter includes the income listing, and the wage and income transcript through the Transcript Delivery System shows the same documents. On the phone, ASFR will send the IRP including spousal information if the spouse authorizes it.
Does signing the response form instead of filing make the year go away faster?
It assesses the proposed amount immediately and gives up filing status, dependents, deductions and credits. It also does not start the assessment statute, since a waiver is not a return under Rev. Rul. 2005-59 as the IRM applies it. For most clients the return is the better document.
Will penalties be abated if the client files once the letters arrive?
Not automatically. Failure-to-file and failure-to-pay penalties are assessed on balance-due ASFR returns unless relief is established, and the estimated tax penalty is computed manually. First Time Abate can apply if the prior three years are clean; see the FTA checker.