Key Takeaways
Audit reconsideration gives eligible taxpayers another opportunity to challenge audit results. It may be available if you disagree with the findings, missed the original audit, have new supporting information, or did not receive audit notices after moving.
New documentation can be critical to your request. The IRS generally wants information that was not previously considered, such as receipts, bank statements, canceled checks, contracts, or other records that support the items you are disputing.
The IRS can fully accept, partially accept, or deny your request. Depending on its review, the IRS may remove or reduce the assessed tax or leave the original assessment unchanged. If you disagree with the reconsideration results, additional options may be available.
What is Audit Reconsideration?
Audit reconsideration is the process of reopening your IRS audit. This is typically done when someone disagrees with the results or the Substitute for Return (SFR) the IRS has filed on their behalf.
When to Request Audit Reconsideration
There are generally four (4) situations when you may request audit reconsideration:
- You disagree with the findings.
- You did not appear for your audit.
- There is additional information that was not provided during the original audit.
- You moved and did not receive notices/letters regarding the audit.
When Reconsideration is Not an Option
You cannot request reconsideration if any of the following are true:
- You’ve agreed to pay the amount you owe through an Offer in Compromise (OIC), or signed IRS Form 906 (closing agreement) or Form 870-AD.
- You have already paid your tax debt in full.
- A final determination has been issued by the U.S. Tax Court (or other court) on the amount you owe.
If you paid your tax bill in full, but feel it was incorrect, you may submit an amended return (1040X) and request a refund.
How to Request Audit Reconsideration
You don’t need a special form to request reconsideration. A written request sent to the IRS office listed in your audit report is sufficient. If you cannot locate your report, you can refer to IRS Publication 3598. This not only lists the addresses and phone numbers of audit reconsideration offices, but also information on which documentation you should submit with your request.
Your letter must include the reason why you are requesting audit reconsideration, as well as an explanation of why the audit findings are inaccurate. You can also use IRS Form 12661, Disputed Issue Verification, to identify any audit results you are disputing.
Reconsideration Submission Steps
Step 1: Gather Your Documentation
Be sure to review the examination report and determine which items you are contesting. Gather any new, relevant documentation needed to support your position. This may include receipts, canceled checks, bank statements, contracts, and other documents. Be sure to make copies – do not submit originals. Additionally, do not include any information that was previously presented.
Step 2: Submit Your Paperwork
Along with your written statement (or Form 12661) and copies of your supporting documentation, you should also submit a copy of your audit report (IRS Form 4549). Be sure to include your contact information in your letter, as well as the best time for the IRS to reach out to you.
You can mail in your reconsideration request, or, in some cases, use the IRS Document Upload Tool to submit your documentation.
The reconsideration request will be reviewed if:
- The information presented is new and has not been previously considered.
- You filed a return after the IRS submitted an SFR.
- You believe the IRS made an error (mathematical or procedural) when assessing your tax.
- Your tax liability is unpaid or credits were denied.
What Happens After The IRS Receives Your Request?
Once the IRS receives your reconsideration request, it may send you a letter requesting additional information. Do not delay – send any requested items as soon as possible.
Requesting audit reconsideration does not automatically stop IRS collection activity. If you have received a collection notice or deadline, do not assume that filing for reconsideration extends or suspends that deadline. Taxpayers who are currently under an installment agreement should continue making payments while waiting for a reconsideration response.
Once the review is complete, the IRS may:
- Accept your request and remove the tax assessed.
- Partially agree with your request and partially reduce the amount.
- Decline your request due to insufficient evidence to support your position (no change in tax due).
If you agree with the IRS results:
Pay the tax amount due or make other arrangements (installment agreement, OIC, etc.).
If you disagree with their results:
- Appeal the decision (Appeals Conference),
- Pay the amount due and file a formal claim, or
- Wait for the IRS to send you a bill.
Audit Reconsideration vs. IRS Appeal
Although audit reconsideration and an IRS appeal can both be used to dispute IRS findings, they are not the same process.
Audit reconsideration allows the IRS to reevaluate the results of a completed audit. It is generally appropriate when you have new information that was not considered during the original examination, when you did not participate in the original audit, or when you believe the IRS made an error in determining your tax liability.
An IRS appeal, on the other hand, generally involves asking the IRS Independent Office of Appeals to review a disputed IRS determination. Appeals is separate from the IRS office that initially handled the case and is intended to resolve tax disputes without litigation.
The two processes can also occur sequentially. If the IRS accepts your audit reconsideration request but does not agree with all or part of your position, you may generally be offered the opportunity to request an Appeals conference. However, Appeals rights are not available in every audit reconsideration situation, so it is important to carefully review any notices or letters you receive from the IRS.
Which option is appropriate will depend on where you are in the audit process, the reason you disagree with the IRS, and whether you have new information to support your position.
Frequently Asked Questions
Final Thoughts
Audit reconsideration can provide another opportunity to address an audit assessment when important information was missed, or you believe the IRS reached an incorrect result. A well-prepared request should clearly identify the issues you are disputing and include relevant documentation that supports your position. Because the outcome depends on the facts and circumstances of your case, understanding the reconsideration process and responding promptly to IRS requests can help you navigate the process more effectively.