Audit reconsideration is an IRS administrative procedure that allows a taxpayer to dispute the results of an assessment made because of an audit of taxpayer’s return or of a substitute return filed by the IRS on behalf of the nonfiling taxpayer.
The IRS has the authority to abate part or all of any assessment if:
- The assessment is in excess of the correct tax liability
- The assessment is made subsequent to the expiration of the applicable period of limitations or
- The assessment was erroneously or illegally made
The IRS will not accept an audit reconsideration if:
- The taxpayer has already signed an agreement agreeing to pay the amount owing. Those agreements include:
- Closing agreement
- Offer in Compromise
- Form 870AD with the Appeals Office
- The U.S. Tax Court or another court has issued a final determination on the tax liability.
Audit Reconsideration Requirements
- The return for the tax year in question must be filed
- A copy of the audit report (Form 4549, Income Tax Examination Changes) must be submitted, if available.
- The changes to be reconsidered must be set forth
- A detailed memorandum setting forth the relevant facts and applicable law must be included.
An audit reconsideration is not a matter of right but rather completely at the IRS’s discretion. The request should include the taxpayer’s position and arguments based on the law and should include supporting evidence. It may not be worthwhile to submit an audit reconsideration if there is not sufficient evidence to support the taxpayer’s position. The IRS will typically delay collection activity when an audit reconsideration has been submitted, although it is not required by law to do so.
For further explanation, feel free to contact our legal counselors. We will walk you through the entire process.