It’s best to explore IRS audit reconsideration if the IRS audits your tax return and you now owe back taxes. You can submit new tax documents through audit reconsideration to show the IRS made a mistake. These supporting audit reconsideration documents can then be used by the IRS to determine if the new tax debt should be reversed and your back taxes removed.
What Is IRS Audit Reconsideration?
The IRS offers audit reconsideration to help you when you disagree with IRS audit adjustments to your tax return. You’ll receive an audit report in the mail from the IRS with its changes to your tax return, and you’ll need to file a copy of this report with your audit reconsideration form or letter.
Who Can Request IRS Audit Reconsideration?
You CAN request IRS audit reconsideration if:
- You disagree with the amount you owe the IRS.
- You have new financial information for income and/or expenses to share with the IRS.
- You did not previously appear for an audit meeting or send documentation to the IRS.
- You moved and did not receive the IRS audit report at your new address.
You CANNOT request IRS audit reconsideration if:
- You paid your back taxes in full. (Note: you’ll need to submit Form 1040X instead as well as a claim for refund.)
- A US Tax Court already decided you owe the IRS audit amount.
- You already agreed to pay the back taxes you owe the IRS. (Note: you accepted an Offer in Compromise or signed Form 906 or Form 870-AD).
How Do I Request IRS Audit Reconsideration?
A request for IRS audit reconsideration must be carefully prepared to ensure the IRS accepts it. When the IRS sends you the original audit report detailing how it determined its changes and the back taxes owed, review it carefully to determine which parts you want the IRS to reconsider. This will help you determine what documentation you need to support your request.
All supporting documentation will need to be sent to the IRS, including a copy of the IRS audit report (Form 4549) and copies your documents with new information (bank statements, loan documents, canceled checks, etc.). Only send copies of new documents to the IRS and keep the originals for your records.
The IRS won’t accept original documents and may reject your audit reconsideration request if you include originals.
When you send your request, attach IRS Form 12661 (Disputed Issue Verification) and IRS Form 4549 (your audit report). Form 12661 is the IRS form for you to explain why you disagree with the audit’s changes and adjustments. You can also write an IRS audit reconsideration letter instead of filling out this form.
If you decide to write an audit reconsideration letter instead of using Form 12661, make sure it has all relevant information for the IRS to evaluate your request. A reconsideration letter must have the reasons for why you are requesting audit reconsideration and a summary of the new information that shows the IRS audit adjustments are wrong.
How Long Does It Take for the IRS to Respond to my Requests?
The IRS will often contact you within 30 days of your request. In some cases, however, it may be several months before you hear from the IRS. If more information is needed, the IRS will send a letter to let you know what else you must provide.
When the IRS receives your request, they may decide to delay or pause collection activity. However, expect IRS collections to resume if the documentation you provided is insufficient to support your request and you did not respond to IRS requests for more information within 30 days.
Note that if you’re already on an IRS payment plan/installment agreement, continue to make payments while the IRS reviews your audit consideration request.
What Are My Payment Options If the IRS Rejects my Request and I Owe Back Taxes?
If the IRS rejects your audit reconsideration request, you have many different payment options depending on whether you can pay your back taxes in full. To pay the full amount of your back taxes, you can use IRS Direct Pay, Electronic Funds Withdrawal (EFW), debit/credit card, or check/money order.
However, if you CANNOT pay your back taxes in a single payment, apply for the IRS Fresh Start Program. With Fresh Start tax relief, you can set up an IRS installment agreement to make affordable monthly payments, submit an Offer in Compromise to lower taxes you owe, or request Currently Not Collectible status to temporarily delay IRS collections.
How Can Wiztax Help?
Call us today at (866) 568-4593 to learn more about how we can help with your IRS audit.
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