IRS Reconsideration Guide

Your Guide to IRS Audit Reconsideration: Steps & Tips

A Guide to the IRS Audit Reconsideration Process

One of the most annoying aspects of dealing with the IRS is getting audited. But as annoying as audits are, there’s something even worse. It’s completing an audit and then having the IRS ask you to pay even more money because of a mistake or error you supposedly made.

Thankfully, there’s a process that allows you to challenge the IRS’ findings following an audit. It’s aptly called audit reconsideration. Despite this name, this process can also be used to challenge an IRS tax assessment after it files a return on your behalf (aka substitute for return).

If you’re facing an audit, dealing with a substitute for return, or even just worried about an audit, you may be wondering about the reconsideration process. Here is an overview, or to get help now, contact us at the Timothy S. Hart Law Group today.

When You Can Ask the IRS for Audit Reconsideration

You may request audit reconsideration in the following situations:

  • You did not appear for an in-person audit or provide the information requested by the IRS during a correspondence audit.
  • You moved and never received the IRS audit examination report.
  • You have new information to provide the IRS that you did not present during the original audit.
  • You disagree with the IRS’ audit assessment.

Even if one of the above situations applies to you, audit reconsideration is not available if:

  • You already paid the IRS what they say you owe. In this case, you’ll file a formal claim with the IRS asking for a refund or amend your return by using IRS Form 1040X, Amended U.S. Individual Income Tax Return.
  • You entered into an agreement with the IRS to pay the amount they say you owe.
  • The U.S. Tax Court or another court has issued a final decision about your tax liability.

In situations where you want to challenge the IRS in a tax matter unrelated to an audit or substitute for return, you have the option of going to court or taking advantage of the IRS appeals process.

How to Request Audit Reconsideration

The first step requires you to review the examination report and accompanying documents from the IRS to identify what you feel the IRS got wrong. You’ll then find the documentation to support your position. Whatever documents you find need to contain new information that the IRS hasn’t yet seen or considered.

If your request for audit reconsideration follows a substitute for return instead of an audit, then you should also file the missing return to replace the return the IRS prepared for you.

The second step involves making photocopies of documents in support of your position and writing a letter outlining your arguments as to why you want reconsideration. While there’s no specific format or form for this letter, the IRS recommends that you complete IRS Form 12661, Disputed Issue Verification. You’ll also want to include a copy of the examination report (Form 4549) if it’s available.

In addition to the copies of documents and Forms 12661 and 4549, you want to provide daytime and evening telephone numbers, as well as the best time for the IRS to call you.

You can send your audit reconsideration request by fax or mail using the fax number or mailing address located on the examination report. If this information isn’t listed on the examination report, you can call the IRS for this information. You can call 1-877-777-4778 or ask to speak with a Taxpayer Advocate, or you can call the IRS’s main number at 1-800-829-1040.

If faxing your request, write the relevant tax year and your tax identification number (Social Security number (SSN), Individual Tax Identification Number (ITIN), Employer Identification Number (EIN), etc.) on each faxed page.

Common Mistakes During the Audit Reconsideration Process

To increase the chances of success and reduce the possibility of delays, there are some common mistakes to avoid. The first mistake is sending information the IRS has already seen. The point of audit reconsideration is to bring new information to the IRS’ attention. Making the same arguments using the same information is unlikely to lead to a lower tax bill.

Not providing all the information necessary to support your contentions is also a commonly made mistake. If there is information or documents that can prove what you claim, include it with the audit reconsideration request. If you’re lucky, waiting until the IRS formally asks for additional information or documents will only delay a final decision. If you’re not lucky, the insufficient information will lead to the IRS denying the relief you request in your audit reconsideration.

A final common mistake is to wait too long to request the audit reconsideration. Even though you can make your request at almost any time after the audit or tax assessment from the substitute for return, it’s recommended you do so sooner rather than later. This is to avoid additional interest and/or penalties.

These mistakes are why it’s sometimes a good idea to hire a tax professional like the ones from the Timothy S. Hart Law Group, P.C. They can more quickly identify new information to support your position and prepare an audit reconsideration request that is complete and less likely to lead to delays.

Finally, as a practical matter, do not send originals when mailing your audit reconsideration request to the IRS. Doing so won’t lead to delays or increase the possibility of rejection, but you won’t get the originals returned to you, and you risk losing them in the mail.

How Long Does the Audit Reconsideration Process Take?

The IRS aims to make a decision within 30 days after receiving your request. This is a bit optimistic, as the IRS is often bogged down with work, so it’s more likely to take 60 to 90 days. A decision could be further delayed if the IRS requests additional information. If this happens, the IRS will send you this request by letter and give you 30 days to provide the requested information.

What’s the Difference Between an Audit and Audit Reconsideration?

An audit refers to the IRS’ review of your income tax return to ensure the credits, deductions, and other claims or positions you make are correct and supported by the facts. In contrast, an audit reconsideration is the IRS taking a second look at any conclusions made from the audit because new information has been brought to its attention.

What Happens After the IRS Reviews My Audit Reconsideration Information?

There are three possible outcomes after the IRS reviews your information. First, they will accept all of your arguments and remove (abate) the tax assessed. Second, they will accept part of your arguments and reduce part of the tax assessed. Third, they will disagree with all of your arguments and reaffirm the initial tax assessed.

What Can I Do If I Disagree with the Outcome of Audit Reconsideration?

If you want to challenge the results from the audit reconsideration, you can either request an Appeals Conference or pay the amount due, then file a formal claim for a refund in the U.S. District Court or the Court of Federal Claims. You are not required to hire a tax professional in either situation, but it’s probably a good idea. There’s higher complexity at this stage and the fact that you’ve already been unsuccessful once when your audit reconsideration request did not turn out the way you wanted.

Get Help Now

If you’re interested in discussing what an audit reconsideration tax attorney can do for you, please contact us at either of our New York City or Albany offices. Even though our tax law firm is based in the state of New York, we can help you with your IRS matter no matter which state you live in. We offer free consultations, so you have nothing to lose by giving us a call.

Attorney Timothy Hart

Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]