Information on Unfiled Tax Returns

I owe taxes for 2001 but received a refund in 2005. What gives?

Read full question
Bill's Answer: Answered by Daniel Cohen

Thank you for your question about a year in which you had an unfiled tax return. It is understandable that you're confused about why you received a refund one year, but are now being told that you owe for an earlier year. I will try to explain what happened.

Substitute for Return

If the IRS shows that you presently owe $2000 for tax year 2001 and you did not file that return, then it is clear that the IRS has filed that return for you. This IRS substitute-for-return (or SFR) is based on whatever income was reported to the IRS for you on that tax year.

The balance they assessed for 2001 on the SFR did not take into account any business or personal expenses you may have had in that year that may have reduced the tax debt. You don't get any credit for deductions that you would be entitled to take, unless you inform the IRS.

Quick tip  If you are struggling with IRS tax debt, get a no-cost, no obligation analysis of your options from one of's pre-screened tax specialists.

You are allowed to replace any SFR with an SFR replacement that lists all your deductions. Once the IRS processes your return, it will adjust the assessment it made on the SFR. If the IRS has already collected from you for a debt that your SFR replacement proved you didn't owe, then you can get any money back that you paid to the IRS in excess of what you actually owe.

It can take the IRS a few years to catch the fact that you did not file and to file an SFR for you. In your case, it appears that the IRS did not file the SFR for you until after you received your refund for tax year 2005. If the SFR assessment had been in place, the IRS would have applied your refund towards the SFR balance owing.

IRS Collections

It is not just your raw tax debt that is recalculated, when you replace an SFR, but the penalties are, too. Any penalties the IRS hit you with are adjusted and figured back to the tax due date on the new assessment.

If you are facing collections for one or more SFRs, you may want to get professional tax assistance. If you work with a professional, they can access all your old income information that was reported to the IRS, even if you no longer have the records. The IRS has record of any income that was reported in your name, whether it was 1099 income or W-2.

I suspect you received a refund for tax year 2004 because the IRS had not computed the SFR balance for tax year 2001 and there was no assessment in place at the time you filed the 2004 return. This is quite normal as it often is several years after the filing due-date for the IRS to generate an SFR assessment.

However, it's not a good idea to delay the filing of the 2005 return. If you have a balance due on that tax return, failure to file and pay can result in large penalties and interest.

In sum then, I would recommend that you retain a firm to file a corrected 2001 return so that the IRS will set aside their SFR balance. In addition, they can complete your 2005 return.

If you want more information on IRS filings and back tax obligations, please read other information available at

I hope the information helps you Find. Learn. Save.



Rate this article
Not helpful

Comments (16)

Clarence R.
Canton, OH  |  October 20, 2011
I would like know why the IRS sent me a notice in regards to CP71 when I only get SSI monthly and I have not worked.
October 20, 2011
A CP71 is a reminder of the amount you owe in tax, penalty, and interest. Contact the IRS to learn more about the circumstances behind the notice.
March 07, 2010
Contact the Internal Revenue Service. Start with the IRS Taxpayer Advocate Service.
Crystal B.
March 06, 2010
someone filed my grandbaby on there return and my daughter is trying to fine out who did it, can you tell me how to find out who did it. thank you miss blake
February 23, 2010
Work with your attorney on creating a subpoena.
Sally .
February 23, 2010
My ex refuses to provide his income to the court or show up to hearings. How do I subpoena the IRS for his tax records?
November 27, 2009
You will need to subpoena your ex-spouse's tax records either from him or the IRS. A subpoena is an order from the court to produce a person or records in response to a lawsuit. If he had a good-faith belief he was still married from 1997-2000 he would glady produce his tax returns from those years to show that he was filing as a married individual. However, I do not see that what your ex-spouse says he believed regarding his marital status is of relevance in a case like this.
Susan S.
November 27, 2009
My ex husband claims that he did not know that he was divorced until 2000. We were divorced in 1997 how can I find out how he filed his taxes during the years 1997-2000. He is trying to get out of child support for those years as it was written in the divorce decree
March 05, 2009
There are conditions to be met, when you claim someone as a dependent, so the person who has claimed your daughter on his/her tax file would have had to met those requirements. Check out IRS Publication 17 for additional info,, or Publ 501 to find out more on the eligibility of a dependent,
March 05, 2009
Bradfords .
February 04, 2008
It looks like above that Freedom Tax Relief will do this for you cheaply. Its not hard to do, you just need a firm that can get access to the IRS records and what the IRS thinks you owe.
Waiting for comments to load Loading more comments
Thanks for your feedback!

Get Tax Relief Help Today!


Tool Box   Easy to use resources to help you find solutions to your money questions