IRS audit reconsideration is a process for asking the IRS to reevaluate certain closed audit assessments or disallowed credits. It may be useful when you did not participate in the original audit, did not receive the letters, have relevant information the IRS never considered, or believe a processing or computational error occurred.
Reconsideration is not a replacement for every appeal or court procedure. Start by identifying whether the audit is still open, whether tax has been assessed and paid, and whether an agreement or court decision limits the available options.
Philip Falco, a Denver tax attorney and CPA, assists with IRS audit disputes, document review, and the preparation of a supported response.
When reconsideration may be available
The IRS audit reconsideration procedures describe cases involving an unpaid assessment or disputed reversed credits, identified adjustments, and new information or an IRS computational or processing error. The taxpayer generally must have filed a return.
Typical situations include an examination completed while the taxpayer had moved, an adjustment made without records that are now available, or a specific error in the assessment. Simply disagreeing with the total, without addressing the issues and evidence, is unlikely to resolve the dispute.
Reconsideration can also be relevant when the IRS prepared a substitute for return and the taxpayer supplies an actual delinquent return. That filing should be coordinated with the existing assessment and notices. See our unfiled-return services.
When another procedure may be required
If the liability has been paid in full, the IRS generally directs taxpayers to a formal refund claim rather than audit reconsideration. For an individual income tax return, Form 1040-X may be involved. Refund claims have their own deadlines.
Some agreements and final court determinations bar reconsideration. IRS Publication 3598 identifies examples, including closing agreements, compromise agreements, certain Appeals agreements, and final court determinations. Bring any previously signed documents to the initial review.
If an audit is still open or a Notice of Deficiency deadline is running, responding in that process may be the priority. Do not wait for reconsideration later on the assumption that the same rights will remain available.
How to organize a reconsideration request
- Obtain the examination packet. Review Form 4549, any explanation of adjustments, notices, and records of prior responses.
- List each disputed item. Identify the tax year, adjustment, amount, and reason you disagree.
- Connect evidence to the issue. Explain what the additional records establish and how that changes the assessment. Distinguish new information from documents already considered.
- Use the appropriate submission route. Follow the instructions for the office handling the matter. For eligible correspondence-audit cases, the IRS provides document-upload and mailing options.
- Retain a complete copy. Keep the request, supporting documents, and proof of submission. Send copies rather than irreplaceable originals.
The IRS offers Form 12661, Disputed Issue Verification, to organize disagreements. A clear issue-by-issue letter may also be used. The IRS correspondence-examination reconsideration guide describes these options.
An example of useful supporting information
Suppose an audit disallowed a business expense because the IRS received no documentation. A reconsideration request could identify the specific adjustment, supply the relevant invoices and payment records, and explain the business purpose and tax year. The request should show how the evidence supports the treatment claimed. This is an example of presentation, not a promise that a particular deduction will be allowed.
Does a request stop collection or extend a deadline?
Do not assume that sending a reconsideration request automatically stops a levy or extends an appeal, Tax Court, or refund deadline. IRS procedures provide for collection holds in qualifying circumstances; confirm how the request is being handled and whether a hold applies to your account.
If collection activity is already underway, address it alongside the liability dispute. Our IRS collection representation page describes that separate part of a case. Continue to read new notices while the request is pending.
What happens after the IRS reviews the request?
The IRS may request more information, accept some or all of the proposed correction, or decline to change the assessment. Response times vary. If you disagree with the result, review the decision letter for available Appeals options and any response date. The options depend on the case’s procedural history.
Schedule a $500 Tax Attorney Consultation to review the audit history, unpaid balance, and additional evidence. The fee covers up to one hour of total attorney time, including review, analysis, preparation, and the telephone consultation. Ongoing representation requires a separate engagement.
General information; eligibility and available remedies depend on your records, payments, agreements, and notices.