IRS Audit Reconsideration

IRS Mission

• The Internal Revenue Service aims to provide top-quality service to American taxpayers.
• This is achieved by aiding in understanding and fulfilling tax responsibilities.
• It involves applying tax laws with integrity and fairness.

Audit Reconsideration

• Audit Reconsideration addresses disagreements with IRS audit results on tax returns.
• It applies both to returns filed by the taxpayer and those created by the IRS due to non-filing.
• Such creation is authorized by Internal Revenue Code 6020(b).

Situations for an Audit Reconsideration Request

• Situations include not attending the original audit.
• Reasons involve moving and not receiving IRS correspondence.
• You may have additional information not presented during the audit.
• Disagreement with the audit assessment is another valid reason.

Steps for Audit Reconsideration

• Review the examination report to identify incorrect items.
• Gather new documentation to support your position, ensuring it's relevant to the tax year.
• Reconsideration is accepted if new information is submitted, a return was filed after IRS completion, or there's a belief of computational/processing error.
• Reconsideration is accepted if the liability is unpaid or credits are denied.

What to Include in your request

• Include photocopies of documents with a letter explaining the reconsideration request.
• Use Form 12661, Disputed Issue Verification, to explain disagreements.
• If available, include a copy of the examination report (Form 4549) and new supporting documentation.
• Include daytime and evening telephone numbers.
• Do not send originals, as they will not be returned.
• Include identifying information like TIN and tax year on each faxed page.

When the IRS will not accept an audit reconsideration request

• If you previously agreed to pay by signing forms like 906, 870-AD, or a compromise agreement.
• The amount owed is from final partnership item adjustments under TEFRA.
• A final determination on tax liability has been issued by the United States Tax Court or another court.

What happens after you submit documentation

• The IRS will send a letter if more information is needed to reconsider disputed issues
• Provide complete information on each disputed issue
• Each issue is considered separately based on new information.
• Adjustments are made if new information and tax law support the change.
• Collection activity may be delayed upon receiving documentation but may resume if the documentation is insufficient.
• If you have an installment agreement, continue making payment.
• Refer to Publication 1546, Taxpayer Advocate Service - Your Voice at the IRS, if experiencing economic hardship.

Notification of Review Completion

• If your information is accepted, the assessed tax will be abated (removed).
• If your information is partially accepted, the tax will be partially reduced.
• If your information does not support your claim, the assessed tax will not be eliminated.

Disagreement with Reconsideration Results

• You can request an Appeals Conference, pay the full amount and file a formal claim, or do nothing, and the IRS will send a bill.

Taxpayer Rights

• Right to be Informed: Clear explanations of tax laws and IRS procedures.
• Right to Quality Service: Prompt, courteous, and professional assistance.
• Right to Pay the Correct Amount: Pay only the legally due amount.
• Right to Challenge IRS Position: Raise objections and provide documentation.
• Right to Appeal: Fair and impartial administrative appeal.
• Right to Finality: Know the time limits for challenging IRS and IRS deadlines for audits/collections.
• Right to Privacy: Expect legal and minimally intrusive IRS actions respecting due process.
• Right to Confidentiality: Expect non-disclosure of information unless authorized by taxpayer or by law.
• Retain Representation: Right to have representation and seek assistance from Low Income Taxpayer Clinics.
• Fair and Just Tax System: Expect consideration of circumstances and assistance from the Taxpayer Advocate Service.

Payment Options

• Pay the full amount by check or money order payable to "United States Treasury" with tax year, Social Security Number, and phone number.
• Payment by Credit or Debit Card: Convenient, safe, and secure payments via phone or Internet through authorized service providers.
• Convenience fees apply.
• Transaction confirmation serves as proof of payment.
• The Electronic Federal Tax Payment System (EFTPS): Free system for paying federal taxes electronically.

Installment Agreement (IA)

• It allows you to pay your debt in smaller, more manageable amounts.
• Requires equal monthly payments.
• Interest and penalties continue to accumulate.
• Set up requires a user fee.
• Reinstatement also comes with a fee.

Payment Methods for Installment Agreements

• Personal or business checks, money orders, or certified funds.
• Credit and debit cards.
• Payroll deductions.
• Electronic transfers (direct debits).
• Collection actions generally cannot affect property while the request is considered
• Collection actions generally cannot affect propert while the agreement is in effect
• Collection actions are not allowed for 30 days after a request is rejected.

Offer in Compromise (OIC)

• Allows the IRS to accept less than the full amount owed under certain conditions.
• It applies when full collection is doubtful or would create economic hardship.
• May settle an unpaid tax account, including penalties and interest.
• Typically involves an application fee and a required initial payment.

Temporarily Delay ofCollection Action

• Occurs if the taxpayer cannot pay any of their tax debt.
• Your debt will continue to increase until it is paid in full.
• Ability to pay will periodically be reviewed.
• A Notice of Federal Tax Lien may be filed.

Taxpayer Advocate Service

• Helps resolve tax problems unsuccessfully addressed with the IRS.
• Offers special help for significant hardships.

Frequently Asked Questions (FAQ)

• There is not a specific timeframe to file for audit reconsideration. As long as the tax remains unpaid
• All reconsideration requests are first reviewed in the IRS campuses. Address is obtained by calling IRS
• Form 12661, Disputed Issue Verification, is recommended to explain the issues you disagree with.
• IRS handles all request timely and the taxpayer should hear back from them within 30 days
• You must include documentation to support your reconsideration request.
• With provided explanation of acceptability, examiners may also provide a list of documentation that you submitted
• Send it to the address listen on your examination report