The Art of Audit Reconsideration: Turning the Tables on Your IRS Audit

An IRS audit is something we all dread, especially when it comes with unexpected tax assessments. Audit reconsideration is all about finding a strategic opportunity to challenge the IRS’s findings and potentially reduce or eliminate those additional tax liabilities. You’ll want an experienced tax defense lawyer on your side to get your audit overturned.

Understanding IRS Audit Reconsideration

Audit reconsideration is a procedure available to taxpayers who disagree with an IRS tax assessment resulting from an audit. This process allows you to present new information that was not previously considered, and if it’s done right, it could lead the IRS to adjust or reverse its initial assessment. The goal here is to ensure that the tax liability accurately reflects your financial situation based on all relevant information.

For you to initiate a reconsideration, you’ll have to meet certain conditions, and your tax lawyer will be able to help you assess whether you qualify. First, the tax assessed must remain unpaid or any tax credits in dispute must have been reversed by the IRS. Second, you must identify the specific adjustments you are disputing and provide new documentation to support your position.

This process can be particularly helpful if you missed the original audit appointment, moved and did not receive the audit notice, or have new information that was not available during the initial audit.

Reasons to Request a Reconsideration

If you did not attend the original audit appointment or failed to submit the required documents due to unforeseen circumstances, you might have grounds for reconsideration. The IRS understands that life events, such as moving to a new address or hospitalization for a serious injury or illness, can lead to missed correspondence, and thus it may be willing to reconsider the audit results if you can provide evidence of why you didn’t attend your original audit.

Additionally, if you fundamentally disagree with the audit assessment, or if new, relevant information has come to light, you can request a reconsideration. For example, the IRS might have filed a Substitute for Return (SFR) on your behalf if you did not file a return, using their available data to determine your tax liability. If you later obtain documents that challenge this assessment, presenting this new information can prompt the IRS to revise its findings.

Preparing Your Reconsideration Request

A successful reconsideration request has to start with a thorough review of the original audit report, and this is always best done while working with a qualified and experienced tax defense lawyer. The audit report will outline the IRS’s findings and the rationale behind their tax assessment. Carefully examine each item to identify areas where you believe the assessment was incorrect or incomplete. Gather all relevant documents that support your position and be sure that what you’re sending was not previously submitted during the initial audit.

For documentation, you might need to include copies of income statements, bank records, receipts, and any other pertinent evidence. Understand that you’ll need to send a very comprehensive and organized package to the IRS if you want to show the validity of your claims and have a good chance of having the audit overturned. A lawyer can help you do this and will also include a detailed letter explaining the reasons for your reconsideration request and highlighting the new information and how it affects the audit results.

IRS Forms

Form 12661, the Disputed Issue Verification, allows you to formally request reconsideration by outlining the specific items you are disputing and providing a rationale for each. Additionally, Form 4549, the Income Tax Examination Changes, summarizes the IRS’s proposed changes to your tax return and should be included with your reconsideration request to substantiate your claims.

While it is not mandatory to use Form 12661, it can definitely keep the process moving more quickly and smoothly by providing a structured format for your request. Alternatively, you can submit a well-crafted letter that includes all necessary information, but you need to be very sure it is clear, concise, and addresses each disputed item in detail. In most cases, it’s best to let your lawyer handle this.

Writing an Effective Reconsideration Letter

If you opt to write a letter instead of using Form 12661, talk with your lawyer to ensure that it includes all pertinent details. It should begin by addressing the letter to the appropriate IRS office as indicated in your audit report. Then, it must clearly state the reasons for your reconsideration request, specify the items you are disputing, and provide a summary of the new information you are submitting. An effective reconsideration letter absolutely must be well-organized and professional, and many people aren’t familiar with the kind of jargon and writing style that the IRS will be looking for.

It needs a clear introduction that outlines the purpose of your request and provides a brief overview of the issues at hand. There then must be detailed sections for each disputed item, following the outline you laid out in your introduction, and explaining specifically why you disagree with the IRS’s assessment and how the new information supports your position. The disagreement cannot simply be that you do not like the assessment: you must be disagreeing because you have evidence to the contrary.

The letter needs to end with a clear, succinct conclusion summarizing your request and expressing your willingness to provide further clarification if needed. The tone of the letter must be professional, objective, and in no way accusatory, insulting, or emotional. Any issues with money and taxes are naturally distressing and may cause the average person a great deal of anger and frustration. For this reason, it’s best to let a professional tax lawyer write the letter for you. They will know the right tone to take as well as the correct format and style of writing.

Submitting Your Reconsideration Request

Once you have gathered all necessary documents and prepared your reconsideration letter or completed Form 12661, your lawyer will submit your request to the IRS office that last corresponded with you.

After submitting your request, be prepared for a potentially lengthy wait. While the IRS aims to respond within 30 days, they very often miss this deadline, and it is not uncommon for the process to take several months. During this time, continue making any required payments under an existing installment agreement to avoid additional penalties and interest.

Potential Outcomes of Reconsideration

The IRS may respond to your reconsideration request in several ways. If it accepts your new information, it may fully abate (remove) the additional tax assessed, and this would reduce your tax liability to zero. In some cases, the IRS may partially accept your information, leading to a reduced tax liability, but not do away with all of it. Alternatively, the IRS may determine that the new information does not support your claims and uphold the original assessment.

If you disagree with the outcome of the reconsideration, you have the option to request an Appeals Conference with the Office of Appeals. This provides another opportunity to present your case and potentially reach a more favorable resolution. You can also pay the amount due in full and file a formal claim for a refund using Form 1040X, Amended U.S. Individual Income Tax Return.

Seeking Professional Assistance

An audit reconsideration process is difficult, requires careful attention to detail, and can take quite a lot of time to do right. In nearly all cases, you’ll have the best experience if you use a qualified tax attorney to help you. This is especially the case if you have lots of money on the line or the issue is particularly complex. The more you have to lose, the more vital it is to have skilled help.

If you’ve been audited and want to get that reconsidered, contact us now at Silver Tax Group. We have helped thousands of clients resolve their issues, and we can help you, too.

About The Author:

Picture of Chad Silver
Chad Silver

Attorney Chad Silver is a member of NATP, ABA, BNI, AIPAC, and is admitted to both the United States Tax Court and Michigan Bar. He has been instrumental in helping his clients protect their assets from IRS controversy and seizure. Attorney Silver, has published a book called; “Stop The IRS” which serves to educate people on tax rules, regulations, and how to overcome their own Tax Problems.

Picture of Chad Silver
Chad Silver

Attorney Chad Silver is a member of NATP, ABA, BNI, AIPAC, and is admitted to both the United States Tax Court and Michigan Bar. He has been instrumental in helping his clients protect their assets from IRS controversy and seizure. Attorney Silver, has published a book called; “Stop The IRS” which serves to educate people on tax rules, regulations, and how to overcome their own Tax Problems.

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