Audit Reconsideration
If you disagree with the results of an IRS audit and want the decision reviewed, you can request audit reconsideration. This process allows you to present new information or arguments that the IRS did not consider during the original audit. There are a few situations in which audit reconsideration is eligible to be requested:
- You disagree with the IRS’ proposed changes for tax
- You failed to send information to the IRS or appear to any audit appointments
- You now have new information regarding the scope of the audit
- You never received the audit notice due to moving
However, you cannot request audit reconsideration if you have paid or entered into an agreement to pay the tax liability resulting from the audit. You can request a refund through an Amended Tax Return (Form 1040X) or file a lawsuit for a refund.
To request audit reconsideration, you should gather all the new information and supporting documentation. Once you have gathered your documentation, you will prepare a written request for audit reconsideration. Your letter should explain why you disagree with the audit findings and highlight the new evidence you are providing to support your position. Along with your letter you should provide a copy of your audit report and copies of all new documentation.
Once submitted, you should continue to monitor the request and respond promptly to any IRS correspondence or requests for information. The IRS will review the reconsideration request and issue one of three possible outcomes:
- No change: The IRS may uphold the original audit results if they find that the new information does not change their assessment.
- Reduction of Liability: The IRS may accept your new information and reduce the tax liability. This scenario would apply if the IRS found that the new documentation only applied to a portion of the tax liability.
- Full Relief of Liability: The IRS may accept your new information and fully reduce the tax liability.
If you agree with the reconsideration from the IRS, you should pay or enter payment agreements for any remaining balances. If you disagree with the reconsideration, you can appeal through the IRS Office of Appeals and continue to appeal through the US Tax Court if necessary.
CP2000 Reconsideration
Requesting CP2000 reconsideration allows you to challenge a proposed tax increase or penalties related to underreported income if you believe the IRS’s findings are incorrect. The process involves providing new information or correcting any errors related to your tax return.
The first step in requesting CP2000 reconsideration is to gather supporting documentation that backs up your disagreement with the IRS. With this information, you should draft a formal letter to the IRS explaining the disagreement and showing how your documentation supports your stance. You will include a copy of the notice and copies of your documentation with the formal letter. Keep the information concise and relevant to the proposed adjustments.
Once submitted in the mail, you should monitor the status of your reconsideration request and promptly respond to any information/documentation requests from the IRS. The IRS can respond in one of the following ways:
- No change: The IRS may stand by their original assessment if they find that the new information does not change their findings.
- Reduction or Elimination of Tax: If the IRS agrees with your documentation, they may adjust or eliminate the additional tax and related penalties.
If you agree with the IRS’ decision and there is a remaining tax liability, you should pay or enter a payment agreement with the IRS. If you disagree, you can appeal the decision with the IRS Office of Appeals and through the US Tax Court if needed.
Reconsideration can be complex and require a lot of time. Assistance from a tax professional can eliminate anxiety and ensure accurate handling of your request. If you’re uncertain about how to proceed, consider seeking the help of a tax professional such as an enrolled agent, CPA, or tax attorney. They can assist in reviewing the CP2000 notice, preparing your response, and representing you during the reconsideration or appeals process.
