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Posted On November 25, 2020
Are You Eligible for an Audit Reconsideration?

Are You Eligible for an Audit Reconsideration?

An audit reconsideration could help a taxpayer resolve an IRS dispute. However, there are only four situations where this process may be requested. The taxpayer may use a tax attorney, certified public accountant, or enrolled agent for representation before the IRS if there is a disagreement with the results of an audit.

What is an Audit Reconsideration?

The Internal Revenue Manual (IRM) defines audit reconsideration as the process used:

To reevaluate the results of a prior audit where additional tax was assessed and remains unpaid, or a tax credit was reversed. If the taxpayer disagrees with the original determination, he/she must provide information that was not previously considered during the original examination. 

An audit reconsideration may be requested by writing a letter explaining the reason for the request. The letter should include new information the taxpayer wants the IRS to consider. Along with the letter, copies of supporting documentation should be provided, as well as a copy of the initial audit report if available.

Four Situations Where an Audit Reconsideration May Be Requested

A taxpayer may request an audit reconsideration to reopen an IRS audit for four reasons:

  1. There is new information to provide to the IRS regarding the audit of the individual’s income or expenses.
  2. There is a disagreement regarding what the IRS says is owed.
  3. The taxpayer never appeared for the audit or neglected to send information to the IRS.
  4. The individual relocated and has not received the initial audit report from the IRS.

When Can’t a Reconsideration Be Requested?

Not every taxpayer will be eligible for an audit reconsideration. However, depending on the circumstance, there may be other options available. For example, a taxpayer may not request an audit reconsideration if they have already paid the full amount previously stated as owed to the IRS. If a refund is desired from the IRS a Form 1040X, or Amended U.S. Individual Income Tax Return, must be filed.

If the taxpayer already agreed to pay the amount owed by signing an agreement with the IRS, such as an offer in compromise (OIC), Form 906, Closing Agreement, or other formal agreement, a reconsideration may not be requested. Additionally, audit reconsideration cannot be requested if the United States Tax Court or another court has previously issued a final determination that the taxpayer owes the tax.