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Audit Reconsideration | International Tax Lawyers Minnesota

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Audit Reconsideration is a very important IRS procedure that may provide a taxpayer with a “second chance” to challenge the results of an established IRS determination without going through the expensive process of tax litigation (assuming it is still available as an option). In this article, I will introduce and explore the concept of audit reconsideration for educational purposes.

Audit Reconsideration: General Purposes

Audit Reconsideration is procedure that allows a taxpayer to contest the results of a prior audit where additional tax was assessed and remains unpaid (or where a tax credit was reversed). This procedure is also utilized to challenge a Substitute for Return (SFR) determination.

When Can a Taxpayer Request Audit Reconsideration?

One of the most important reasons why audit reconsideration is considered to be such an important procedural tool is that it can be requested by a taxpayer at any time after an examination assessment is made (as long as the tax remains unpaid). In other words, Audit Reconsideration provides a taxpayer with the flexibility that is unmatched by any other appeal mechanism.

Reasons for Requesting Audit Reconsideration

Audit Reconsideration can be requested for any of the following five reasons:

1. Taxpayer failed to appear for the IRS audit;

2. Taxpayer moved and never received correspondence from the IRS (often, in a situation involving correspondence audits);

3. Taxpayer has additional information that was not presented during the audit;

4. Taxpayer simply disagrees with the final audit assessment (perhaps, because the IRS committed a computational or processing error in assessing the tax);

5. Taxpayer files an original delinquent return after an assessment was made due to a substitute return executed by the IRS.

Procedural Prerequisites for Requesting Audit Reconsideration

There are two important procedural prerequisites for making the request for audit reconsideration: (i) the taxpayer must have filed a tax return; and (ii) the assessment must remain unpaid or the Service must have reversed tax credits that the taxpayer disputes.

Circumstances When the IRS Will Not Consider a Request for Audit Reconsideration

There are certain circumstances when the IRS will not even consider a request for Audit Reconsideration:

(1) The taxpayer has already been granted an audit reconsideration request and did not provide any additional information with the current request that would change the audit results;

(2) The assessment was made as a result of a closing agreement under Code Section 7121 on IRS Form 906 (signed by a taxpayer pursuant to assessment within the IRS Offshore Voluntary Disclosure Program) or Form 866; same applies to assessments made under Form 870-AD;

(3) The assessment was made as a result of a compromise under Code Section 7122 – such agreements are almost always final and conclusive;

(4) The assessment was made as the result of final TEFRA administrative proceedings;

(5) A final decision with respect to the tax liability was made by the US Tax Court, US District Court or the US Court of Federal Claims.

How to Request Audit Reconsideration

There is not any special form that the IRS requires in order to request an audit reconsideration. Instead, any letter composed by the taxpayer or his representative will be deemed sufficient as long as the prerequisites listed above are satisfied and the request includes the following information:

(1) the request must identify which adjustments the taxpayer is disputing – the proposed changes must be made clear to the IRS;

(2) the request must provide additional information that was not considered during the original examination (only copies of the documents should be mailed to the IRS because originals will not be returned);

(3) a copy of the original Form 4549 should be included with the letter; and

(4) a daytime and evening telephone number and the best time for the IRS to reach the taxpayer.

The request letter with supporting documentation should be mailed to the correct address listed in the IRS Publication 3598 or the office that last corresponded with the taxpayer.

Contact Sherayzen Law Office for Professional Help With Your Request for Audit Reconsideration

If you disagree with the results of your personal or business income tax and/or FBAR audit, contact Sherayzen Law Office to explore your appeal options. Preserving and properly using your administrative IRS appeal options is extremely important given the expense involved in a tax court litigation. At Sherayzen Law Office, we have helped numerous clients with their IRS Appeals and Audit Reconsideration Requests and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

IRS Audit Reconsideration

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Have your tax returns been subject to an IRS audit? You should be aware that IRS procedures may allow you to contest the findings through IRS Audit Reconsideration, provided that you meet certain requirements. If the amount is significant or you believe that the IRS was erroneous in its determination, you contact Sherayzen Law Office, PLLC.  Our experienced law firm can assist you with your IRS Audit Reconsideration and help you avoid making costly mistakes.

This article will explain the basics of audit reconsideration. It is not intended to constitute tax or legal advice.

IRS Audit Reconsideration: Reasons the IRS May Reconsider an Audit

There are various reasons for which you may request IRS Audit Reconsideration. For example, if you were not able to appear for your audit, or if you moved during the audit and did not receive correspondence from the IRS, the IRS may grant the request. Additionally, if you believe that you have additional important information to substantiate your case that was not available to you during the audit, you may be allowed to have the IRS reconsider the audit. Further, if you disagree with the assessment from the audit, a request may be granted, depending upon the IRS’ discretion. You are well-advised not to make the determination by yourself about whether you have a sufficient reason for IRS Audit Reconsideration; this is a question for an experienced tax attorney.

Process for Requesting IRS Audit Reconsideration

In general, there are several steps you will need to take if you are requesting IRS Audit Reconsideration. If you are planning upon making the claim that you are presenting new evidence that you did not present before at the audit, you usually should first obtain all the necessary documentation that you will need to substantiate your claim and make sure that the evidence supports the correct tax years in question. You will then need to file a letter explaining your request for reconsideration, along with photocopies (originals will not be returned to you) of the evidence supporting your new claim.

The IRS notes that, provided you meet certain requirements, your IRS Audit Reconsideration request may be granted if: “You submit information that we have not considered previously. You filed a return after the IRS completed a return for you. You believe the IRS made a computational or processing error in assessing your tax. The liability is unpaid or credits are denied.” On the other hand, the IRS usually will not accept IRS Audit Reconsideration request if you signed an agreement agreeing to pay your amount of tax liability (such as a Form 906, Closing Agreement; a Compromise agreement; or an agreement on Form 870-AD with IRS Appeals), if the amount of tax you owe is due to the result of final partnership item adjustments under the Tax Equity Fiscal Responsibility Act (TEFRA), or if the United States Tax Court, or another court, has rendered a final determination on your tax liability.

Once the documentation for the IRS Audit Reconsideration is received by the IRS, the IRS may send you a letter requesting follow-up information regarding your request. The IRS may delay collection activity once your initial letter is received; however, collection activity will resume if you fail to respond to request from the IRS for additional information within 30 calendar days, or if the IRS deems your documentation insufficient to support your claim.

Once the IRS has completed its review of your IRS Audit Reconsideration request, you will be notified as to whether your position was accepted or rejected. If you position was accepted, the IRS may either abate your assessed tax, or partially abate the tax, depending upon the circumstances. If your position is rejected, your assessed tax will stand. If you disagree with the results you may either pay the amount (either in full, or by making other payment arrangements), or by seeking certain other remedies. In future articles, we will explain other options you may have at that point.

Contact Sherayzen Law Office for Help With An IRS Audit

If you are currently being audited or the IRS already rendered its decision and you are looking for a way to challenge it, contact Sherayzen Law Office for professional legal help. Our experienced legal team will thoroughly analyze your case, determine the available options, implement the chosen course of action (including preparation of any tax forms) and rigorously defend your interests during IRS negotiations.