When You Should Request An IRS Audit Reconsideration

Has the IRS audited one of your tax returns and determined that your tax liability is bigger than you originally reported? Or did it create a return for you after you filed and presented you with a large tax bill? In either case, you can challenge the result by requesting an IRS audit reconsideration.

The audit reconsideration process allows U.S. taxpayers to re-examine the results of an audit where a tax credit was reversed or additional tax was assessed. If you were unable to file an administrative appeal or escalate your case to the Tax Court for any reason, requesting an audit reconsideration gives you another chance to present your case.

Can Anyone Request This?

While any taxpayer who disagrees with the results of an IRS audit or tax return can request a reconsideration, your case should meet the following criteria for the government to reopen it.

  • You disagree with the new tax liability.

  • You have new information, such as receipts or banking information, about your income or expenses. This information must be related to the audited tax year.

  • You did not send the IRS your financial information or appear for the audit meeting.

  • You did not get the audit report because you moved.

If any of the following circumstances apply, you can’t request a reconsideration:

  • You already paid the new or adjusted tax bill. If this is the case, you have to submit an amended tax return and request a refund.

  • You already agreed to pay the amount owed and entered into a payment arrangement such as an offer in compromise.

  • The assessment was made after you entered into a closing agreement or signed a waiver.

  • The tax debt is the outcome of final partnership item adjustments under the Tax Equity Fiscal Responsibility Act.

  • The U.S. Tax Court has made a final determination on how much tax you owe.

How to Request an Audit Reconsideration

After you receive the audit report and identify the changes that you believe to be inaccurate, your next step should be collecting documentation that supports your position, and these documents must not have been part of the original audit. After this, you write a letter to the IRS office that last corresponded with you (make sure to keep your letters), explaining why you are requesting reconsideration, and provide documentation like the following:

  • A copy of the audit report

  • Copies of invoices, receipts, canceled checks, and other information that supports your argument.

In general, the IRS will respond to audit reconsideration requests within 30 days. Potential outcomes are:

  • Acceptance of the new information and removing the previously assessed tax

  • Acceptance of some of the new information and partially reducing the tax liability

  • Concluding that the new information didn’t support your position and letting the original assessment stand

If you accept the results of the reconsideration, you can pay the balance in full or, if doing so would cause financial hardship, request an IRS payment arrangement. If you disagree with the results, your next step is to request a meeting with the Office of Appeals. At this stage, you should consider seeking representation by an enrolled agent, CPA, or experienced tax attorney.

Contact a Tax Attorney

If you are self-employed, receiving an audit letter or notice of proposed adjustment from the IRS is especially daunting. At Safeguard Law, PLLC we will help you navigate the audit or review the accuracy of the assessment, look for ways to minimize any tax liability and propose a payment plan for the remaining balance.

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