A Step-By-Step Guide to Requesting IRS Audit Reconsideration.

Receiving a notice of an IRS audit can be stressful. However, if you believe the outcome of your audit is incorrect or if new information comes to light, you have the right to request an IRS audit reconsideration. This process allows taxpayers to challenge the results of an IRS audit and potentially adjust the amount owed or correct the audit findings. Here’s a step-by-step guide to help you navigate the process of requesting audit reconsideration.

1. Determine Eligibility for Audit Reconsideration

Before you begin the process of requesting audit reconsideration, it’s important to understand the circumstances under which you may be eligible. The IRS will generally consider an audit reconsideration request if:

• You did not appear for the original audit: If you missed the original audit and now have additional information to present.
• You disagree with the audit result: You believe the IRS made an error, either in applying tax law or in calculating the amount owed.
• You have new information: You now have evidence or documentation that was not considered during the original audit.
• You never received a notice of deficiency: The IRS did not send a formal notice of its final determination, which is typically required before additional tax can be assessed.

However, the IRS will not accept an audit reconsideration request if you’ve already agreed to the results of the audit by signing a settlement agreement, or if the U.S. Tax Court or another court has already ruled on your case.

2. Gather Documentation

Once you’ve determined that you’re eligible for audit reconsideration, the next step is gathering all relevant documentation to support your case. This step is critical because the IRS will base its reconsideration on the strength of the new evidence you provide.

Some common types of documentation you may need to gather include:

• Receipts and invoices: To substantiate deductions or credits that were disallowed during the original audit.
• Bank statements: To provide proof of payments or income discrepancies.
• Corrected tax forms: If the issue involves an error in the original return, such as a misreported income figure or missing deduction.
• Correspondence: Any letters, emails, or other communication with the IRS regarding the audit.

Ensure that all documents are accurate, legible, and relevant to the specific issues you are disputing. The more organized your paperwork, the easier it will be for the IRS to review your request.

3. Complete the Audit Reconsideration Request

There is no official IRS form specifically for audit reconsideration requests, but you should prepare a formal written statement outlining why you are requesting reconsideration and what changes you believe should be made to the audit findings.

Your letter should include the following:

• Your name, address, and Social Security Number (or EIN if you're representing a business).
• Tax year(s) in question: Specify the years related to the audit.
• A detailed explanation of why you disagree with the audit results.
• A list of documents or evidence you are submitting to support your request.

The letter should be clear, concise, and professional. Include any key points or explanations that will help the IRS understand why reconsideration is warranted.

4. Submit Your Request

Once you’ve gathered your documentation and prepared your written statement, it’s time to submit your request to the IRS. The submission process involves mailing your audit reconsideration request and supporting documents to the IRS office that conducted the audit. This is typically the address listed on your audit report or notice of tax assessment.

Make sure to:

• Send your request via certified mail: This will provide proof of delivery and ensure that the IRS receives your submission.
• Keep copies of everything: Retain a copy of your request letter and all accompanying documents for your records. If any issues arise, having a copy will be essential.

5. Wait for a Response from the IRS

Once your request is submitted, the IRS will review your case. The process can take several months, depending on the complexity of the issues and the IRS’s current workload.

While waiting, it’s important to note that penalties and interest may continue to accrue on any outstanding tax liability. If you’re concerned about the growing balance, consider making a partial payment while your audit reconsideration is being processed. You can also contact the IRS to inquire about the status of your request if you haven’t heard back within a reasonable timeframe.

6. Respond to Additional IRS Requests

In some cases, the IRS may request additional documentation or clarification while reviewing your audit reconsideration. If this happens, be prompt in responding to their requests and provide any additional information as needed.

Timely communication is critical to keeping your case moving forward. Delays in providing information or ignoring requests can slow down the process or lead the IRS to deny your request for reconsideration.

7. Receive the IRS’s Final Decision

After reviewing your audit reconsideration request and all supporting documentation, the IRS will issue a final decision. The outcome of the reconsideration can fall into one of three categories:

• Approval of your request: The IRS agrees with your argument, reduces the amount owed, or removes penalties.
• Partial approval: The IRS agrees with some but not all of your claims, leading to a partial reduction of the amount owed.
• Denial of your request: The IRS upholds its original audit findings and does not make any changes to the amount owed.

You will receive a written notice of the IRS’s decision, detailing the changes (if any) to your tax liability.

8. Appeal the Decision, If Necessary

If the IRS denies your audit reconsideration request or does not reduce your tax liability as expected, you still have options. You can appeal the IRS’s decision through the IRS Office of Appeals. This is an independent office within the IRS that handles disputes between taxpayers and the IRS.

To file an appeal, you must submit a formal written protest, typically within 30 days of receiving the IRS’s final decision. The appeal process allows you to present your case to a different set of IRS officials for further review.

Conclusion

Requesting IRS audit reconsideration can provide a second chance to resolve tax disputes and reduce your liability. By following the proper steps, gathering strong documentation, and presenting a clear case, you increase your chances of a successful outcome. Keep in mind that communication and timely responses are key throughout the process.

If you find the audit reconsideration process overwhelming or complex, seeking assistance from a tax professional can help you navigate the system and advocate on your behalf.