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Automated Substitute for Return (ASFR) Program Suspended!

Automated Substitute for Return (ASFR) Program Suspended!

The IRS has paused selection of new cases for its automated substitute for return (ASFR) program because of resource constraints, the agency confirmed to Tax Analysts September 27, 2017

“Like many operations across the IRS, work on the ASFR program has been affected by resource limitations,” the IRS statement said. “These resource constraints have forced us to make difficult decisions, even on programs that provide clear benefits to tax administration.”

The IRS said it is continuing to work on active ASFR cases and ASFR reconsiderations. “In addition, we are committed to taking many actions in 2018 to improve methods of allocating nonfiler cases across our potential compliance treatment streams, and this includes the ASFR program,” it stated.

The IRS statement partially confirms a September 26 post on the Procedurally Taxing blog reporting that a Treasury Inspector General for Tax Administration official had announced suspension of the ASFR program. The post was authored by Carlton M. Smith, a retired professor from the Benjamin N. Cardozo School of Law.

The ASFR program produces automatic tax return filings for individuals whose income reported to the IRS indicates a responsibility to file. The system calculates payments and liabilities, and it produces a letter to the taxpayer with the result.

The IRS produced 184,776 ASFRs in fiscal 2015,
according to National Taxpayer Advocate
Nina Olson’s 2016 annual report to Congress.

The IRS said in its statement that the goal of its nonfiler strategy “will be identifying productive nonfiler work that maximizes cases worked while minimizing staff resources and promoting continued filing compliance through programs built to encourage voluntary taxpayer filing and payment.”

Olson told Tax Analysts that she hopes the IRS will use the ASFR case selection pause as an opportunity to address some of the program’s deficiencies.

The Taxpayer Advocate Service declared the ASFR program one of its “Most Serious Problems” in its 2015 annual report to Congress, complaining that the program’s case selection criteria imposed undue burdens on taxpayers and created extra work for the IRS.

Smith said the ASFR program holds taxpayers whose income exceeds a specific threshold to their obligation to file a tax return, but he wondered whether ending the program would save more money than it produces. “I can’t say how many dollars of IRS employee time generates how much revenue out of this program,” he said.

Now once again taxpayers can file the delinquent return(s), then wait 2 years to have them discharged in bankruptcy; as the prohibition against discharging ASFRs in bankruptcy is no longer relevant!

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Read more at: Tax Times blog

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