IRS Audit Reconsideration

IRS Audit Reconsideration 

What is an IRS Audit Reconsideration? Many years ago, our international tax law firm was called upon to assist an International taxpayer who (unwittingly) got caught up in a massive international tax scam. The IRS had issued the Taxpayer many penalties over several different years. The Taxpayer had unknowingly engaged a fraudulent preparer, submitted false tax returns — and then when the taxpayer was audited the preparer did not appear at the audit. When the Taxpayer conducted his online due-diligence, he met with great resistance. To his dismay, all the “self-proclaimed expert” international tax lawyers of the world wide web, former IRS Agents/Examiners, etc. old him he had no recourse. When we took over the case, it was clear that there were no appeal rights left. But, one rock that had been left unturned was making an audit reconsideration submission to the IRS. Over the next two years while negotiating with different agents at the IRS, we were able to abate every single penalty that had been issued — but it all started with the audit reconsideration.

IRS Audit Reconsideration Process

Let’s take a look at what the audit reconsideration is and how it works:

The IRM summarizes the Audit reconsideration process as:

• • • “Audit reconsiderations are requests to reevaluate the results of an audit assessment when a taxpayer disagrees with the original audit determination and the additional tax has not been fully paid. If the tax has been full paid, then it is a claim.”

Publication 3598 Audit Reconsideration Summarized

We will go through and summarize the Publication to provide some more insight to the process:

• • • “An Audit Reconsideration is a process used by the Internal Revenue Service to help you when you disagree with the results of an IRS audit of your tax return, or a return created for you by the IRS because you did not file a tax return as authorized by the Internal Revenue Code 6020(b).”

Reasons for a Request

• • • “You may request 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

      • Disagree with the assessment from the audit”

What does this Mean?

It means that in certain situations, a taxpayer may qualify to have their tax audit reconsidered. For example, if a Taxpayer did not receive notice of the audit/or did not appear (usually if the taxpayer has a good reason) then this may suffice for the IRS to reconsider the audit. Sometimes, after the audit was completed, the Taxpayer may have discover additional facts after the audit has completed and slash or may disagree with the final assessment (and have more to offer at the present time versus at the time the audit was completed) — and this may also qualify for the IRS to approve an audit reconsideration.

Steps to Request an IRS Audit Reconsideration

These are the steps the IRS requires taxpayers to take if they want the IRS to consider an audit reconsideration:

• • • “Step 1: Review the examination report and attachments to determine which items you feel are incorrect. Gather the documentation needed to support your position. 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. Your reconsideration request will be accepted if:

      • • You submit information that we have not considered previously.

        • You filed a return after the IRS completed a return for you.

        • You believe the IRS made a computational or processing error in assessing your tax.

        • The liability is unpaid or credits are denied.

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

    • Step 2: Make photocopies of the documents gathered above and attach to your letter explaining your request for reconsideration. Please ensure that you are clear as to which changes you want us to consider.

      • • Form 12661, Disputed Issue Verification, is recommended to explain the issues you disagree with. If available, attach a copy of your examination report, Form 4549, along with the new documentation that supports your position. Include a daytime and evening telephone number and the best time for us to call you. Please do not send original documents – originals will not be returned. Note: If you are faxing your documents, please include your identifying information (i.e., your TIN and tax year) on each page you fax. This is to ensure all pages are associated with your case. The IRS will not accept your audit reconsideration request if:

        • You previously agreed to pay the amount of tax you owe by signing an agreement such as a Form 906, Closing Agreement; a Compromise agreement; or an agreement on Form 870-AD with the Appeals office.

        • The amount of tax you owe is the result of final partnership item adjustments under TEFRA, Tax Equity Fiscal Responsibility Act.

        • The United States Tax Court, or another court, has issued a final determination on your tax liability. Once your documentation is received

        • We will send you a letter if we need further information to reconsider your disputed issue(s). It is in your best interest to provide complete information on each disputed issue.”

Additional information about audit reconsideration can be found here at Publication 3598.

Frequently Asked Questions (FAQ) About IRS Audit Reconsideration

The IRS publishes various FAQs regarding the IRS Audit Reconsideration Process (which are reproduced below):

1. How long do I have to file for audit reconsideration?

An audit reconsideration request can be made anytime after an examination assessment has been made on your account and the tax remains unpaid.

2. Where do I send my reconsideration request?

All reconsideration requests are first reviewed in the IRS campuses listed in this publication. Please call one of the toll free numbers for the campus to obtain correct address. If a face to face meeting is necessary the campus will transfer to the office nearest you.

3. Do I need to complete a special form to request audit reconsideration?

The IRS doesn’t require you to complete a special form, however, Form 12661, Disputed Issue Verification, is recommended to explain the issues you disagree with.

4. How long will it take before I receive an answer to my request?

The IRS strives to timely handle all requests received. You should expect to hear from us regarding your reconsideration request within 30 days after submission.

5. Do I need to send proof with my request for reconsideration?

Yes. In order to have your case reconsidered, documentation must accompany the request.

6. How do I know if the information I sent before was considered?

When the examiners provide any explanations to you, a list of the documentation that you submitted will be included with an explanation as to if it was acceptable. If the list doesn’t include the documents that you submitted, you may need to resubmit that information.

7. Do I need to resend the information previously submitted?

Under normal circumstances you do not. If for some reason it appears that the IRS didn’t receive previously submitted documentation, you may resubmit that information.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure. 

Contact our firm for assistance.