Audit Reconsideration

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If your tax debt is the result of an examination of your return and you believe that the amount assessed is incorrect, you may qualify for audit reconsideration. This option is also available if you have had a Substitute for Return filed for you by the IRS.

The IRS will generally accept an audit reconsideration request when any of the following conditions are met:

  • You can submit information that has not been previously considered which might change the amount of the liability (for example, if you were unable to produce proof of charitable donations but have since obtained copies from the charities).
  • You file a return after the IRS has completed and assessed a Substitute for Return.
  • You believe the IRS has made a computational or processing error in assessing the tax.
  • The liability is unpaid or credits are denied.

You will not qualify for audit reconsideration if any of the following apply:
  • You previously agreed to pay the amount of tax by signing Form 906, Closing Agreement, a Compromise Agreement, or an agreement on Form 870-AD with the Appeals Office.
  • The amount of tax due is the result of a partnership adjustment under TEFRA.
  • The Tax Court has issued a final determination of liability.

If you wish to pursue an audit reconsideration, you first must have filed a return (especially if the tax due is from the assessment of tax on a Substitute for Return). The request for audit reconsideration must be made in writing, and you should submit all relevant documentation to support your position on each issue with which you have a dispute. In addition, you should submit a copy of the Form 4549 from your original audit, if applicable. In some cases, the IRS may request additional information and these requests should be responded to within 30 days.

The IRS may delay collection activities while the audit reconsideration is reviewed, however they are not under obligation to do so. If you are under installment agreements when submitting for audit reconsideration you should continue to make your payments timely until you have received a determination letter.

If you disagree with the rejection of the audit reconsideration, either in whole or in part, you can request a conference with the Appeals Office by filing a written protest. You also have the option of paying the amount in full, and then filing a Formal Claim for refund on Form 1040X. This must be done within three years of the date the return was filed, or two years from the date the taxes were paid, whichever is later. If the Formal Claim is again disallowed, you can again request an appeals hearing or file suit in the US Court of Federal Claims within two years of the date of mailing of the Claim Disallowance Letter. You cannot petition the Tax Court in these cases.

TaxAudit’s tax professionals are experts in dealing with the IRS. We can help you determine if an audit reconsideration is the best course of action for you and represent you throughout the process.

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