Taxation & Estate Planning

Audit Reconsideration Process

By Darrin Mish

There are two types of audit reconsideration. The type addressed in this article is for taxpayers who have been audited and dispute the accuracy of the audit findings. You thought your IRS Problems were over after your recent audit was concluded, right?  Now you have received the results of the audit and you are in disagreement with the tax assessment the IRS has issued regarding your tax return.  What do you do now?

The IRS provides you with the opportunity to submit an audit reconsideration.  This process allows you to disagree with assessments made from a tax audit or taxes you owe from a tax return created by the IRS because you failed to file your taxes yourself.  The IRS uses this informal process to resolve cases.

Steps to the Audit Reconsideration Process

• Your tax return must be filed
• You will need to obtain a copy of the audit report and fill out Form 4549(Income Tax Discrepancy Adjustments) or 1902-B(Report of Individual Income Tax Examination Changes)
• You must notify the IRS, either verbally or written, of the proposed changes you want it to consider
• You need to attach the examination and any necessary documentation you have to support your position

The IRS may contact you requesting more information before they make a determination.  An adjustment will be made if the information you provide and the tax law support the requested change.

Important to Note

The IRS will not accept an audit reconsideration if you have already reached an agreement by signing a Closing Agreement, a Compromise agreement, or Form 870-AD  with the Appeals Office, the tax owed is a result of TEFRA(Tax Equity Fiscal Responsibility Act of 1982), or the courts have issued a final determination on your tax liability.

Audit Reconsideration Acceptance

The IRS will accept your request for audit reconsideration if you provide information it did not consider previously, if a tax return was filed after it completed one for you, and if computational or processing errors were made by the IRS when your tax was assessed.

The IRS will notify you at the completion of the review.  If it accepted your information, the assessed tax will be eliminated; if it only accepted part of your information, your assessed tax will only be partially reduced; if it did not accept your information; your assessed tax will not be eliminated.

If You Agree

If you agree with the results of the review, you must pay the assessed tax.  If you cannot pay this amount in full then you can either obtain an installment agreement or submit an Offer in Compromise.

If You Disagree

If you disagree with the results, you can make a written request for an appeals conference; pay the amount assessed and file a formal claim; or, wait for a bill from the IRS.

Whether your IRS Problems are from a disagreement with a recent audit or other IRS issues, contact our office today for help.  Our knowledgeable staff can guide you through the process and help resolve your IRS Problems.

Full post as published by IRS Problem Solver Blog on October 14, 2008 (boomark / email).