Your Guide to IRS Audit Reconsideration Requests

Published By: Chad Silver
On: June 14, 2021
Last Updated: December 26, 2022

See More in: Audits

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What Led To Your Tax Audit?

An audit does not by itself mean you are guilty of wrongdoing. However, an audit does increase the likelihood that you could face severe tax penalties or even criminal charges.

Which is why it’s always a good idea to revisit why individuals get audited and how to avoid audits.

Generally, the IRS can audit returns filed in the past three years. The penalties that result from an audit can be severe. It can be as much as 20 percent of the amount of an “erroneous claim.”

If the IRS decides a return is frivolous and doesn’t contain enough information to assess whether it’s accurate, a taxpayer may face a penalty of $5,000. Also, just as a reminder, taxpayers can face criminal charges if the IRS feels you are guilty of tax evasion or fraud.

Another important note about the reconsideration process is that it isn’t the same thing as filing an amended return.

If, for example, you previously paid the amount the IRS says you owed but now realize they were wrong in their assessment, you must file a formally amended return instead of seeking reconsideration.

Reconsideration requests are also not appropriate for people who resolved their tax liability by accepting an offer in compromise or by filing closing agreements, or for those whose tax liability has been adjudicated by the United States Tax Court.

9 Common IRS Audit Triggers

However, the IRS will also more likely audit a certain type of individual. This can include those who earn more than $200,000. The IRS will also be on the lookout for significant changes in income, and will pay attention to salaries of principals in S Corporations if that salary is unusually low. And the IRS tends to audit businesses that mainly deal in cash transactions.

When deducting alimony, the IRS will pay attention to whether reporting is consistent. This is relatively easy for IRS officials to detect since those making such deductions need to also report the Social Security number for those receiving the alimony payments.

Some taxpayers will report expenses in round-dollar amounts rather than to the nearest dollar. For example, a taxpayer may try to suggest all of the expenses are either $50 or $100. The IRS will be suspicious of such reporting.

Don't Agree With The IRS Audit? Maybe It's Time For an Audit Reconsideration

Reconsideration is, in some ways, an appellate process. You are asking the IRS to “reconsider” their previous determination of your tax liability. Reconsideration is most often filed by people who:

Reconsideration is also helpful for people who have new information that wasn’t available at the time of earlier IRS proceedings or tax return filings. Remember, staying organized and keeping all of your documents in order is a must. Consider keeping a folder or file handy so that you’ll be prepared for the tax season.

Individuals and businesses that have gone through an audit may decide they don’t agree with the result or decision made by the IRS, including increased tax liability. A taxpayer may file an IRS audit reconsideration request in some cases in hopes of getting the ruling reevaluated. Here are a few things to keep in mind:

Some decide to request an official audit reconsideration, wherein the IRS reevaluates a previous audit result, including a reversed tax credit or additional tax that has yet to be paid.
Taxpayers usually make such requests when they disagree with the outcome of the audit.
Taxpayers who do make such requests then need to provide information about the issue at hand that was not included or considered during the initial audit.
They may also invoke this process if the IRS made an error in the audit or when a substitute for return (SFR) is contested.

Taxpayers may also request IRS audit reconsiderations because they didn’t show up for the audit, they didn’t receive the applicable IRS correspondence, there is new information related to the audit, or the IRS denied tax credits for the taxpayer in a past evaluation. These requests are not too complicated, but it’s essential to know the steps to take and how you’re eligible. Here is your guide to IRS audit reconsideration requests and how to file them.

How To Get Help With Reconsideration Requests

If you find yourself in a situation like this you may feel very frustrated. The IRS and taxes, in general, are a confusing process.

It is totally normal for people to move from their previous residence or disagree with the results of a prior tax assessment.

In the case of one of our clients, the IRS would only send her documents to her previous residence where she could not attain them.

The IRS offered only two options, to send her documents to her previous residence or access online via her credit card. Our client only had an American Express Credit Card, which the IRS does not take.

Unfortunately, our client could not receive her documents due to this situation. We helped her throughout the entire process so that she could be reconsidered by the IRS due to these unique circumstances.

Everyone has a different story, but you don’t have to go through this alone or feel bogged down by the IRS wait time where you endlessly wait to reach a real human.

Are you not even sure these IRS humans exist?

Don’t worry, we have you covered. Reconsideration may be the best way for you to resolve your disputed tax liability.

Only you, working closely with an experienced tax attorney, can decide which course of action will yield the best result for your unique financial situation.

Were You Audited?

Get in Touch with our tax attorneys to get a reconsideration filed today!

855-900-1040

How to Know if You’re Eligible for an IRS Audit Reconsideration

Not all taxpayers are eligible to request a reconsideration. They must have filed a tax return for the applicable year, for instance. Additional eligibility requirements include the following:

Tax Assessment Remains Unpaid

The result of the initial audit may have been an increased tax liability, which still must be unpaid when making the request, or the IRS must have issued a tax credit reversal that the taxpayer is disputing. Taxpayers who have already paid the new tax amount following an audit will need to file a formal tax return amendment instead.

Taxpayer Must Identify Adjustments

The request must include exactly what adjustments you are seeking from the IRS. The agency requires that you lay out everything clearly for them to consider the request.

Provide New Information

These requests also need to include supporting information about the case, and information must be new and related to the issue at hand.

The IRS Made an Error

Sometimes the IRS does make errors when processing audits, so this would be a legitimate reason for them to look at the audit result again. This could be a computational or processing error.

A taxpayer will typically file a request for an IRS audit reconsideration if they disagree with an increased tax liability, but the above requirements or circumstances are necessary for the request to move forward. Talk to a tax attorney so you know you have a legitimate reason to make this request.

3 Steps to File an IRS Audit Reconsideration Request

Taxpayers who disagree with an audit result or need to request a reevaluation can do so in a fairly straightforward, simple process. Follow these steps when you are ready to begin the reconsideration request:

1. Review the Audit

You will first need to review the original audit report and nail down exactly what you disagree with. Your case needs to be clear when you contact the IRS. Include specifics.

2. Gather Information

Gather all documents, records, and information that support your request for reconsideration. Outline what is new that you didn’t present previously.

3. Send Documents

You will need to make copies of all applicable documents and write a letter that explains your request. The IRS will not accept original documents, so always send copies. Other documents to include are Form 12661, Disputed Issue Verification, which explains the issues you are outlining, and Form 4549, which is your original examination report.

There are 10 U.S. IRS campuses where you should send the request via mail or fax, and they are listed on IRS Publication 3598. Talk to a tax professional for help preparing your submission.

What Happens After Your Request Is Submitted

The IRS will accept or deny the request, and usually sends their response within 30 days after you submit it. They should accept the request if the information you provided is new, if you filed a return after the IRS submitted a return for you, if they made a computational or processing mistake, or if the new tax liability is unpaid or credits were denied. The IRS will let you know if they have reduced your tax liability based on the information you provided or if they couldn’t make changes based on what you sent. You can then pay the amount you owe or request an appeals conference if you disagree with their decision. You can send a check or money order to the address you receive on the IRS bill or pay by credit or debit card. You can also make any payment online or via phone to the U.S. Treasury. Note that sometimes credit card servicers charge a convenience fee, which they must disclose.

Contact Silver Tax Group With Questions

IRS audits can be complex and confusing, especially if you think a result was incorrect, for whatever reason. Consider talking about your audit reconsideration options with a tax professional who can walk you through your rights and obligations. The team of experienced tax attorneys at Silver Tax Group can advise you on whether to pursue this course and help you prepare everything accurately and correctly to make the strongest case. We successfully serve a nationwide list of clients, and that has prepared us to help you with any issue related to an IRS audit. Reach out to our team to speak with a tax expert who can help you get the ruling you’re looking for.