What This Letter Means

Letter 1862, Initial Contact Letter for the Substitute for Return (SFR) Program, means the IRS has no return from you for the year shown and has prepared one for you. It comes with Form 4549, Report of Income Tax Examination Changes, which shows the tax, penalties, and interest the IRS proposes.

This usually follows an earlier Letter 2269C that asked you to file within 30 days. When no return came in, the IRS built its own under IRC 6020(b).

Why the Number Is Probably Too High

An SFR is built from what employers, banks, and other payers reported (W-2, 1099, and similar forms). It uses Single or Married Filing Separately status. It allows the standard deduction and nothing else. No business expenses, no mortgage interest, no other deductions unless you file an original return. Your withholding and estimated tax payments are credited. The IRS also considers failure to file, failure to pay, and estimated tax penalties.

An IRS-prepared return is not treated as you filing. It doesn't stop the failure to file penalty and doesn't start the normal clock on assessment.

What to Do

  • File your own return. A signed original return with your real filing status, deductions, and expenses is usually the best response. An unsigned return is not valid.
  • Already filed? Tell the IRS. It will check its records and close the case if your return is there.
  • Filed jointly as the second spouse? Say so. The IRS will look for the joint return.
  • Income report wrong? Get a corrected form or a written statement from the payer and send it.
  • Need more time? Call the number on the letter right away. Extra time is considered case by case, and extensions past 30 days are generally not given.

If You Don't Respond

The IRS moves to a statutory notice of deficiency, the 90-day letter. That notice is your last chance to go to Tax Court before the tax is assessed. After assessment, collection follows. Respond now while you have the most options.

If you received Letter 1862 and need to get unfiled returns done fast, call us at (813) 229-7100.