The probability that a person earning between $25,000 and $50,000 will get audited is approximately 0.4 percent. However, if the Internal Revenue Service (IRS) audits a taxpayer and decides to impose an extra tax liability, that taxpayer may want to undergo the audit reconsideration process. According to the IRS, this is when a person provides the IRS with additional documents to contest a tax assessment created by the IRS due to that person not filing a tax return or due to the results of an IRS audit. Discover how to get the IRS to reconsider a tax assessment and learn how a tax attorney from Damiens Law may be able to help with tax-related issues by calling the Mississippi office at (662) 442-4423 or the Tennessee office at (901) 499-4466.
Understanding Tax Assessment Reconsiderations
Tax assessment reconsiderations refer to an IRS administrative process whereby a taxpayer may dispute the findings of an audit that resulted in a tax increase or the overturning of a tax credit. This is particularly helpful for those who miss a filing deadline. To succeed, it is necessary to submit new details that the original audit did not consider. According to the American Bar Association, the IRS can grant these discretionary reconsiderations if the individual meets one or more of the following conditions:
- The taxpayer changed addresses since filing the original tax return, and the taxpayer did not receive the deficiency notice at the new address
- The taxpayer received no notification regarding a tax assessment or its calculation before receiving a bill
- The taxpayer was not present during an IRS audit or did not respond to it
- The taxpayer does not agree with the results of an assessment following an audit
- The taxpayer was not able to submit evidence supporting an account of his or her tax situation
Why Does the IRS Have a Tax Assessment Reconsideration Process?
Because the tax filing process has many variables and a taxpayer’s circumstances can change dramatically from year to year, the IRS has a tax assessment reconsideration process to ensure that the agency:
- Correctly assesses the tax owed by individuals
- Suspends its collection process while considering a taxpayer’s reconsideration request
- Has procedures to appropriately support finalizing tax assessments
- Handles cases consistently
The IRS wants to collaborate with taxpayers to efficiently and correctly resolve their tax issues. Therefore, taxpayers generally have the chance to successfully apply for a tax assessment reconsideration as long as they submit the correct documents and meet the requirements.
When Is the IRS Likely To Favor a Tax Assessment Reconsideration?
The IRS is likely to favor a tax assessment reconsideration in the following scenarios:
- The taxpayer files a return after receiving an assessment made on his or her behalf by the IRS
- The IRS made an error when completing the individual’s tax assessment
- The taxpayer makes a reconsideration request because the IRS was not provided certain information that would have produced a different assessment result
However, a taxpayer’s tax assessment reconsideration request will be likely to fail in these scenarios:
- The taxpayer submitted a request but provided no additional information that would have changed the results of the initial audit
- The individual’s tax assessment was part of a Section 7122 compromise or made due to a TEFRA administrative procedure
Audit Reconsideration Submission Requirements
Even if a person disagrees with the results of an audit, only some taxpayers will qualify for reconsideration. To file an audit reconsideration request, it is essential that taxpayers meet these criteria:
- The taxpayer filed a return
- The taxpayer has not paid the tax owed on the assessment being disputed or has had tax credits reversed by the IRS
- The taxpayer identifies the assessment that he or she wishes to dispute
- The taxpayer supplies new information that the original audit did not consider
- The IRS introduced a computational or processing error when assessing the individual’s tax return
When submitting the request, it is necessary to send it to a suitable IRS office and include the following documents:
- A document outlining what the taxpayer wants the IRS to correct
- Evidence supporting the taxpayer’s claims, such as tax filing forms, bank statements, loan documents, or canceled checks
- Copies of documents sent from the IRS to the taxpayer, including reports and letters
Requesting a Tax Assessment Reconsideration
Generally, it is a good idea for taxpayers to submit audit reconsideration requests after first checking whether they can file a court petition. To improve a person’s chances that the IRS will accept a tax assessment reconsideration request, follow the steps below.
Analyze the Audit Report and Collate Documents
When applying for a tax assessment reconsideration, carefully analyze the IRS audit report, including how the IRS made its assessments. Then, consider which items in the report to contest. This will help the taxpayer determine what information to gather in support of the tax assessment reconsideration request.
When supplying supporting documents, it is necessary to provide new information that is only relevant to the tax year related to the reconsideration. If the taxpayer already paid the full amount owed, he or she must submit Form 1040X rather than a reconsideration request.
Submit the Documentation
After reviewing the IRS report and gathering the necessary details, send the IRS all the required documentation. This includes a copy of the audit report and copies of the documents in support of the tax assessment reconsideration request. These might include bank statements, Form 1099, and loan documents. Including copies of any other documents that the taxpayer previously gave to the IRS can be helpful.
Include Form 12661
Next, Form 12661 is an official statement that taxpayers complete to formally request a tax assessment reconsideration. If a taxpayer opts to complete this form instead of a tax assessment reconsideration letter, he or she must complete it in full and include any information that is relevant to the request. In this form, taxpayers can outline the parts of the tax assessment they disagree with and describe their reasons.
Add Form 4549
Finally, be sure to include Form 4549, which is the IRS Income Tax Examination Changes form. This form summarizes the changes made by the IRS to the individual’s tax return, alongside any interest or penalties incurred. Including a copy of this form in a tax assessment reconsideration request can help support any disputes raised by the taxpayer.
A seasoned IRS audit lawyer at Damiens Law may be able to help you learn whether it is worthwhile asking the IRS to reconsider a tax assessment and, if so, offer assistance with your audit reconsideration request.
Tips for Writing a Tax Assessment Reconsideration Letter
To submit a request for a tax assessment reconsideration, individuals may complete Form 12661 or write a letter. For those who opt to write a letter, consider these tips:
- Make sure the letter contains as much relevant information as possible in support of the individual’s case
- Mention why the person is seeking a reconsideration, state the information being disputed, and summarize any new information that the individual is providing
- Consider using a template to give the letter an effective structure
What Happens After the IRS Receives an Audit Reconsideration Claim?
After filing a tax assessment reconsideration claim, the IRS then either accepts the changes—partially or in full—or rejects them. The IRS typically provides an explanation supporting its decision when stating the findings of the taxpayer’s reconsideration claim. If the IRS rejects the claim, the individual may appeal in writing to the IRS Office of Appeals.
Additionally, the taxpayer may choose to pay any tax owed and then formally claim a refund. If the IRS rejects the refund claim, the taxpayer may appeal through the Court of Federal Claims or via a district court. Sometimes, the IRS can take several months to respond to tax assessment reconsideration claims, but taxpayers can potentially speed up this process by contacting the Taxpayer Advocate’s Office if they have encountered economic hardship or other forms of suffering due to the delay.
How Long Do Tax Assessment Reconsiderations Take To Complete?
The IRS typically takes up to 30 days to respond to tax assessment reconsideration requests, but it may take longer depending on how busy the department is. Sometimes, the process can take several months. In addition, the IRS may decide to resume collection activities after 30 days if an individual does not provide additional information when requested.
Contact an IRS Audit Lawyer for Assistance
According to the IRS Taxpayer Advocate Service, individuals cannot request a tax assessment reconsideration if they have already paid what they owe, agreed to pay via a signed agreement, or had a court rule against them regarding the tax owed. Due to these requirements, individuals may want to contact a knowledgeable IRS audit lawyer who can help determine if they can apply for a tax assessment reconsideration and assist with the application. To find out if you can get the IRS to reconsider a tax assessment, consider contacting an experienced tax attorney at Damiens Law by calling the Mississippi office at (662) 442-4423 or the Tennessee office at (901) 499-4466.