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IRS Notice CP2566: SFR Proposed Assessment

Notice CP2566 informs you that the IRS has prepared a Substitute for Return (SFR) for a year you did not file. The SFR is based on information the IRS has — W-2s, 1099s, and other third-party reports — but includes no deductions, no credits

By Michael Brennan·3 min read·Updated April 23, 2026
High Urgency
Notice CP2566 informs you that the IRS has prepared a Substitute for Return (SFR) for a year you did not file. The SFR is based on information the IRS has — W-2s, 1099s, and other third-party reports — but includes no deductions, no credits, and uses the worst possible filing status. The result is almost always a tax assessment dramatically higher than you would actually owe. CP2566 gives you the opportunity to file your own accurate return before the SFR assessment becomes final. See our unfiled taxes guide.

How to respond to CP2566

The correct response is almost always: file your own tax return for that year. Your properly prepared return — with actual deductions, credits, and correct filing status — will nearly always result in substantially lower tax than the SFR. The IRS will process your original return and adjust the SFR accordingly. Respond within 30 days to prevent progression to CP3219A.

Why SFR assessments are inflated

SFR methodology produces inflated assessments because: (1) SFR uses single or married-filing-separately status, whichever produces higher tax; (2) SFR includes no itemized deductions and sometimes incorrect standard deduction amounts; (3) SFR does not apply any credits — no Earned Income Credit, no Child Tax Credit, no education credits; (4) SFR does not account for cost basis on investment sales (a $100,000 stock sale is treated as $100,000 of gain regardless of what you paid for the stock). Your own return corrects all of this.

What comes after CP2566

If you do not file a return in response to CP2566, the IRS proceeds to CP3219A (statutory Notice of Deficiency) assessing the SFR tax. You then have 90 days to petition Tax Court. After 90 days, the inflated SFR tax is assessed and collection begins. File your own return at CP2566 stage to avoid this entire cascade.

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Frequently asked questions

Can I just agree to the SFR and move on?+

Almost never in your interest. SFR typically assesses tax 2-10x higher than what you would actually owe. Filing your own return almost always reduces the assessment substantially.

What if I do not have records for the tax year in question?+

Request a Wage and Income Transcript from the IRS — they have copies of every W-2, 1099, and other information return issued to you. Request Account Transcript to see what the IRS already shows. Use these to prepare the return.

Can I still claim deductions and credits after CP2566?+

Yes. Filing your own return reopens all deductions and credits you would be entitled to. This is the biggest reason to file: even if you cannot pay the tax, filing dramatically reduces the assessed amount.

What if the SFR tax year is very old?+

You can still file, though refund claims are lost after three years. For years where you owe, filing remains beneficial: even a decade-old SFR can be corrected by filing your own return, reducing the assessed tax and any subsequent collection amount.

About the author

M

Michael Brennan

Senior Tax Policy Writer · Fresh Start Division Editorial

Michael Brennan is a Senior Tax Policy Writer at Fresh Start Division, focusing on IRS collections procedure, the IRS Fresh Start Program, and federal tax policy. Michael has written extensively on tax resolution for American taxpayers.

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