Going through an IRS audit can be an overwhelming process on its own, but when the IRS comes back to you with a tax bill or statement that you don’t agree with, the situation quickly escalates. The good news is that the IRS’ audit response isn’t set in stone, and you may be able to have your case reopened for reconsideration. To learn about IRS audit reconsideration, eligibility requirements, and more, read our guide. For information on a specific topic, use the links below to navigate throughout the article, or read end to end for a comprehensive overview on the audit reconsideration process.
- What is an Audit Reconsideration?
- IRS Audit Reconsideration Process
- How Community Tax Can Help
What is an Audit Reconsideration?Audit reconsideration is a process that allows taxpayers to challenge the results of an IRS audit, or reject a return that was created on their behalf as a result of failure to file, per Internal Revenue Code 6020(b). The fact of the matter is that you don’t want to owe any more taxes to the federal government than you’re truly liable for; the audit reconsideration process is there to protect your rights as a taxpayer and ensure that you’re responsible for your respective portion. In addition to verifying that tax assessments are accurate, the IRS also explains that requests shall be handled timely and consistently, and that collections actions be suspended while an audit reconsideration is pending.
Reasons to request an audit reconsiderationLike any other IRS proceeding, there are certain requirements that would render you eligible or ineligible for an audit reconsideration. According to IRS Publication 3598, you may request an IRS audit reconsideration if:
- You did not appear for your audit
- You moved and did not receive correspondence from the IRS
- You have additional information to present that you did not provide during your original audit
- You do not agree with the assessment from the audit
How long do I have to file for audit reconsideration?Taxpayers may file for audit reconsideration after the audit process has concluded, so long as the tax liability is unpaid. You cannot agree with the audit, pay your balance, and then apply for reconsideration — the audit reconsideration process must take place before your tax liability has been satisfied.
What are my rights as a taxpayer?As mentioned, the audit reconsideration process is designed to ensure taxpayers are held responsible for their appropriate tax liability. Additionally, the IRS affords the following rights to taxpayers:
- The right to be informed
- The right to quality service
- The right to pay no more than the correct amount of tax
- The right to challenge the IRS’ position and be heard
- The right to appeal an IRS decision in an independent forum
- The right to finality
- The right to privacy
- The right to confidentiality
- The right to retain representation
- The right to a fair and just tax system
What is the benefit of submitting a request for audit reconsideration?Audit reconsiderations provide an opportunity for taxpayers to present new information that may challenge the IRS’ original audit report. If successful, you may be able to abate the tax bill on your audit either partially or completely.
IRS Audit Reconsideration ProcessIf the above criteria aligns with your situation, you’re probably wondering how you can move forward with the IRS audit reconsideration process. Let’s take a look at the necessary documents, the ensuing process, and the next steps to take to make sure your reconsideration runs smoothly.
Documentation required for audit reconsiderationIn order to file a request for audit reconsideration, you’ll need to provide several documents to the Internal Revenue Service:
- A copy of your audit report (IRS Form 4549)
- Copies of the new documentation that supports your position — copies only, originals will be rejected
- IRS Form 12661, Disputed Issue Verification
Form 12661: Disputed Issue VerificationForm 12661 is the official IRS audit letter for reconsideration that gives taxpayers the opportunity to explain which decisions they disagree with upon receiving results from an IRS audit. To complete the form, you’ll need to provide your name, the relevant tax period, your Social Security Number, information from the original return and audit, and a description of what you disagree with regarding the audit results.
Do I need to send proof with my request for reconsideration?In addition to the statements and information provided on Form 12661, you will also need to provide copies of any new information that supports your claim. The IRS requests that taxpayers not submit documentation that has already been considered as part of the initial audit. The audit results will include a list of the documents that they reviewed — use this as a guide to help you determine what you should and should not include in your request for reconsideration. As a reminder, the IRS will only accept copies of these documents, not originals.
Where do I send the audit reconsideration request?You can send your IRS audit reconsideration paperwork directly to the address that appears on your Examination Report (the original audit results). If the address is not shown, locate your region’s office below, or call one of the provided toll-free numbers:
- Andover Campus
- Atlanta Campus
- Austin Campus
- Brookhaven Campus
- Cincinnati Campus
- Kansas City Campus
- Fresno Campus
- Memphis Campus
- Ogden Campus
- Philadelphia Campus
How will I know if my audit reconsideration is accepted?Your reconsideration request will be accepted if:
- You provide information that the IRS has 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
- You have already submitted a reconsideration request and did not provide any additional information with the current request that would change the results of the audit.
- The results were concluded as a result of a closing agreement entered into under Sec. 7121 using Form 906, Closing Agreements on Final Determination Covering Specific Matters, and/or Form 866, Agreement as to Final Determination of Tax Liability.
- The audit assessment was made as a result of a compromise under Sec. 7122.
- The audit assessment was made as the result of final TEFRA administrative procedures.
- The assessment was made as a result of the taxpayer entering into an agreement on Form 870-AD, Offer of Waiver of Restrictions on Assessment and Collection of Deficiency in Tax.
- The Tax Court has submitted a decision that has become final, or a district court or the Court of Federal Claims has made a final decision.
How long will it take before I receive an answer to my request?The IRS estimates that taxpayers who file for audit reconsideration will receive a response within 30 days after submitting their request.
What happens next?If you are currently on an installment agreement or other repayment plan for an outstanding tax, continue to make payments while you wait for a response from the IRS. After the IRS has reviewed your request, they will inform you of one of the following:
- They have accepted the information you provided in your audit reconsideration and as a result, will abate (remove) the tax assessed.
- They have accepted your information in part and will partially reduce the tax assessed.
- Your information did not support your claim and the IRS is unable to eliminate the tax assessed.
- Request an Appeals Conference.
- Pay the amount due in full and file a formal claim.
- Do nothing; the IRS will send you a bill for the amount due.
- By mail: You can pay your bill in full by mailing a check or money order to the address provided on your bill. Checks should be made payable to “United States Treasury”.
- Credit or debit: Pay your bill by either credit or debt over the phone or by using the IRS website’s e-pay feature.
- Electronic Federal Tax Payment System: EFTPS allows you to submit and schedule a variety of payments to the IRS.
- Installment agreement: An installment agreement allows taxpayers to reconcile their tax debt with the IRS by completing manageable monthly payments rather than having to pay a large lump sum upfront.
- Offer in compromise: An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that authorizes the taxpayer to settle their tax debt for less than the original amount owed.