Audit Reconsideration: Understanding Your Rights and Options as a Taxpayer

Having your taxes assessed by the Internal Revenue Service (IRS) and being told that you owe money can be extremely stressful. Particularly if you disagree with the audit assessment, and believe there has been a mistake. In this situation, Texas taxpayers may be eligible to file an audit reconsideration request.

In order for taxpayers to be eligible to file a reconsideration request, they must have new information that has not yet been considered by the IRS. The audit process can be quite complicated, so we recommend hiring an experienced tax lawyer to help you with the process.

Ronald Arthur Stearns Sr. PLLC has nearly thirty years of experience helping Texas taxpayers deal with the Internal Revenue Service (IRS). He has a deep understanding of the Internal Revenue Code and has helped many clients with tax debt in similar situations to yours.

If you honestly file your tax return, get selected for an audit, and then get told that you have a higher tax bill than expected, it can be extremely frustrating. Ronald Arthur Stearns Sr. PLLC wants to help you explore all possibilities to reduce your tax liability and ensure that you are not being overcharged by the IRS.

He is dedicated to protecting taxpayers’ rights and getting the best results possible. Ronald Arthur Stearns Sr. PLLC has never represented the IRS and cares about protecting citizens in tax matters.

Contact our law firm today to protect your taxpayer’s rights at 210-853-2135.

IRS Audit Reconsideration

The Internal Revenue Service often conducts audits on taxpayer’s financial information, to assess whether there are any errors and that the tax return complies with the law. If there are any discrepancies, and the IRS determines that you under-reported your tax liabilities, you may be required to pay higher taxes. The IRS will usually send out an examination report or audit report outlining the proposed changes in your taxes.

Sometimes, if a business does not file its tax return for that year, the IRS will prepare a tax return on its behalf, outlining the tax owed. However, if the IRS does not have all the supporting documentation for the business, the tax assessment may be incorrect, and the IRS may decide that the business owes more than what they actually should pay.

In either of these situations, a taxpayer or business reserves the right to have their audit reconsidered. An audit reconsideration is a process where you submit your audit results for review to the appropriate IRS office, based on a mistake made during the audit or the finding of  new information. If the IRS audit reconsideration finds that the audit was invalid, you may not have to pay the extra tax debt.

Reasons For Audit Reconsideration

If you request an audit reconsideration, you must have a valid reason under the law. There are a few reasons the Internal Revenue Service will allow an audit reconsideration request, including:

• New Information – If you have new documentation or information that was not available during the original audit, you can request an audit reconsideration. The new documentation could include receipts, bank statements, or additional tax records.
• Failed to Appear – Being unable to appear in the IRS office to present documentation for an audit, or not mailing audit documentation if it is being conducted through mail, is a valid reason for reconsideration if the circumstances behind not being able to are accepted as good cause. 
• Disagree With the Tax Audit – If you disagree with the IRS audit results, and believe there have been administrative errors, a substantial understatement of your income, or an invalid application of tax laws to your situation, you may be eligible for an audit reconsideration.
• Change of Location – If you moved and did not receive the audit report, you can make a request for audit reconsideration.

Whether you have valid grounds to submit a reconsideration request depends on your unique situation. We advise speaking with an experienced tax attorney first before filing a formal request, as they can ensure that you have valid grounds and you meet the requirements to request reconsideration.

Eligibility For Audit Reconsideration

To go through the audit reconsideration process, you must meet certain eligibility requirements. These requirements include:

1. Filed Tax Return – You must have filed your original tax return.
2. New Information – You must have new information or documentation that was not present during the initial audit, such as financial documents, loan documents, or bank statements.
3. Unpaid Tax Liability – If you have already paid the tax debt, you are ineligible for an audit reconsideration. This is because the IRS views payment of taxes as a formal agreement. You cannot request your money back. 
4. Identification of Fault – You must clearly identify where the fault in the audit determination was. It is not enough to get the prior audit reconsidered unless you identify where the auditors went wrong.

If you are ineligible for the audit reconsideration process, you may have to accept the decision of the IRS and pay the tax debt that you owe. An experienced tax lawyer like Ronald Arthur Stearns Sr. PLLC can help you with the reconsideration process and assess whether you are eligible. If you are not eligible, he can help determine whether there are other options available, like a settlement agreement.

IRS Audit Reconsideration Process

The first step in the IRS audit reconsideration process is assessing whether you have a valid reason for the request for reconsideration and whether you meet the eligibility requirements. An experienced attorney can help you with this process and figure out whether you have a valid request.

They will read your audit report, figure out areas where there have been errors, identify a specific area of fault, and help you submit a request for audit reconsideration.

1. Gather Documentation

Once your tax lawyer determines you are eligible for reconsideration, you must begin gathering documentation to support your request. This supporting documentation includes copies of tax returns, financial records, receipts, or any other documents that clearly dispute the findings in the original audit. The information you submit must be new information and you cannot submit documentation that you included in the original audit hearing.

2. Request An Audit Reconsideration

Your Texas tax attorney will then help you submit a request for audit reconsideration. Usually, this is done through an audit reconsideration letter, which contains the reasoning for your request, all the relevant documents, and a copy of your audit report, including the IRS Form 4549 and Income Tax Examination Changes.

Specify which area of the audit you are requesting be reconsidered and provide clear documentation to support your request. A tax attorney with experience writing audit reconsideration letters will ensure that all the correct information is contained in the letter, the documentation supports your claim, and that nothing is left out.

3. IRS Review

Once the IRS receives your reconsideration request, they will usually respond within thirty days. If they accept your reconsideration request and determine that there has been a mistake or your tax situation has changed, they may approve a tax abatement, which means you will not have to pay the extra taxes or will have to pay less than what they originally provided.

If they do not accept your request, and you are not happy with the final determination, you may discuss other options with your attorney, such as an appeal or settlement agreement.

What if my IRS Audit Reconsideration Request is Denied?

If the IRS denies your audit reconsideration and remains firm on its decision that you owe higher taxes, there may still be some options available to you. The first thing to do in this situation is to speak with your tax attorney. They can help you review the explanation given by the IRS for denying your request, and assess whether their decision is valid.

If appropriate in your case, your lawyer could help you request an appeals conference by filing a written protest. You have just thirty days to file a protest after the date the letter was sent by the IRS, so you must act fast in this situation. Your attorney can help you protest the decision to the appeals officer and try to negotiate a solution.

Taxpayer’s Rights

Texas taxpayers have certain rights during the audit reconsideration process that must be respected. If you are unhappy with a decision in an audit, you reserve the right to appeal this decision and provide evidence contesting the findings. Some other rights you have as a taxpayer include:

• The Right To Representation – You reserve the right to either represent yourself during the reconsideration process or have an experienced attorney or another certified tax professional represent you.
• The Right to Present Evidence – You reserve the right to present additional documentation and supporting evidence for your reconsideration requests.
• The Right to a Written Explanation – Taxpayers also have the right to receive all decisions by the IRS in writing. This means you can receive the initial audit decision in writing and the findings of the reconsideration. It should clearly explain their reasoning and outline any changes to your taxes.

To ensure your rights are respected during the audit process, hire an experienced tax lawyer. With a skilled lawyer by your side, you can help ensure that your best interests are protected, that you understand the process clearly, and that you have a strong opportunity to protest your claims.

Audit Reconsideration: Understanding Your Rights and Options as a Taxpayer – FAQ