If you have not filed tax returns for more than two years, there is a way to possibly reduce the principal debt that the IRS “claims” that the taxpayer owes.
If a taxpayer has not filed a tax return, the IRS will typically wait two years and then file a “Substitute for Return.” This is the IRS’s version of your tax return not taking into account any of your typical deductions, exemptions, or write-offs that you may be eligible to claim. Generally, these Substitute Returns grossly overstate a taxpayer’s tax debt.
It is the right of every taxpayer to have a true tax return filed to replace a Substitute for Return. By law the IRS must allow the taxpayer to file over these Substitute Returns. If acceptable, the IRS will zero out the tax debt and recalculate the tax, interest and penalties based on your new and correct tax return.