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What is an IRS Audit Reconsideration?

Have you received a notice from the IRS saying your tax return was audited (or the IRS created a return for you) and you owe taxes, and you disagree with the tax the IRS says you owe?

The IRS typically mails an audit report (sometimes called an examination report) to you within a few weeks after conducting an audit. This report explains any proposed changes to your tax return. You should review the complete audit report, including the report’s attachments to figure out which changes you think may be incorrect. If you don’t have this report or can’t locate the report you received, you may either call the IRS toll-free help line (800) 829-1040 to request a copy of the report.

You may request an IRS audit reconsideration if you:
• Did not appear for your audit
• Moved and did not receive correspondence from the IRS
• Have additional information to present that you did not provide during your original audit; or
• Disagree with the assessment from the audit

Father documentation to support your position

Review the examination report and attachments to determine which items you feel are incorrect. Gather the documentation needed to support your position. Furthermore, verify that the supporting documentation is new information that has not been presented before and ensure that it is for the tax year in question.

Make sure that you provide new documentation and information that wasn’t part of the original audit. The documentation must related to the tax year the IRS audited.

The IRS will accept your reconsideration request if you:
• submit information that the IRS has not considered previously.
• filed a return after the IRS completed a return for you.
• believe the IRS made a computational or processing error in assessing your tax.
• did not pay the tax liability.

If you have already paid the amount due in full, then you must file a formal claim for refund (Form 1040X, Amended U.S. Individual Income Tax Return).

Audit Reconsideration Package

After you have reviewed the examination report and gathered new evidence to support your positions, you will need to prepare an audit reconsideration package for audit reconsideration. To convince the IRS, you must be clear and organized about which changes you want the IRS to consider. You should provide:

  • A copy of your audit report (IRS Form 4549, Income Tax Examination Changes), if available.
  • Copies of the new documentation that supports your position. Don’t send original documents. Send copies.

Moreover, if you have an installment agreement, keep making payments during the reconsideration process.

It is best to provide complete information on each disputed issue. Moreover, the IRS will consider each issue separately based on the new information that you provide. In addition, the IRS can change any adjustment if your new information and the tax law support that change.

When will the IRS Respond?

You should expect to hear from the IRS about your reconsideration request. The IRS will send you a letter, if the IRS audit reconsideration unit analyst needs more information.

You’ll be notified once the IRS reviews all your information. The IRS may respond in the following ways:

  • Accept your information and abate (remove) the tax it previously assessed;
  • Only accept your information in part and partially reduce the tax; or
  • Find that your information didn’t support your claim and the prior assessment stands.

If you agree with the reconsideration results, pay the remaining balance you owe, if any. If you can’t pay in full, consider your payment options. However, if you disagree with the reconsideration response, you can request a conference with the Office of Appeals. You can be represented by an attorney, certified public accountant (CPA), or enrolled agent at this conference to represent and advocate on your behalf. Contact a Los Angeles tax attorney if you have any questions.