The IRS Knows You Exist
If you earned income, someone reported it to the IRS. Your employer filed a W-2. Your clients filed 1099s. Your bank reported interest income. Your brokerage reported investment gains. The IRS receives all of this information and compares it against filed returns. When no return matches your SSN, you enter the non-filer pipeline.
CP59: First Contact
CP59 is the first letter in the non-filer sequence. It tells you the IRS has no record of your return for a specific tax year and asks you to either file the return or explain why you do not need to. This letter is relatively gentle, but it starts a clock. If you ignore it, the IRS escalates.
CP515 and CP516: Escalation
If you do not respond to the CP59, the IRS sends CP515 and then CP516. Each one is more urgent than the last. The IRS is giving you multiple opportunities to file voluntarily before they take action on their own.
CP518: Final Warning
CP518 is the last chance. This letter warns you that if you do not file, the IRS will prepare a Substitute for Return (SFR) on your behalf. An SFR is the IRS filing a return for you using only the information they have, which typically means filing you as single with zero deductions. This almost always results in a higher tax liability than what you would owe if you filed your own return.
CP2566: The Substitute for Return
CP2566 is the notice that the IRS has prepared an SFR and is proposing a tax liability based on it. You have 30 days to either file your own return or accept the IRS's proposal. If you do nothing, the proposed tax becomes an assessment, and the IRS begins collection.
Why Filing Your Own Return Matters
An SFR does not include any deductions, credits, or filing status benefits you are entitled to. If you are married, the SFR files you as single. If you have children, the SFR does not claim the child tax credit or earned income credit. If you have business expenses, the SFR ignores them. Filing your own return almost always results in a lower tax liability, and in many cases, can eliminate the balance entirely.
The IRS gives you at least four chances to file before they do it for you. Take any one of those chances. The return they file for you will always be worse than the one you file for yourself.