When the IRS completes an audit, it often results in adjustments to your tax bill based on the information reviewed. However, audits aren’t always flawless. Situations arise where the IRS might overlook documents, misinterpret financial details, or you might discover additional evidence after the audit concludes. In such cases, you can request an audit reconsideration—a formal review that allows taxpayers to present new or previously unconsidered evidence to potentially change the audit’s outcome.
What Is an Audit Reconsideration?
An audit reconsideration is a process by which you ask the IRS to reevaluate the results of a finalized audit. It differs from an appeal because it is based specifically on new facts or documents that were not reviewed during the original audit, rather than on legal disagreements with IRS determinations.
How to Request an Audit Reconsideration
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Identify the Issue: Review your audit results carefully. Look for mistakes or missing information that could impact your tax liability.
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Gather New Evidence: Collect all relevant documents such as receipts, bank statements, invoices, contracts, or affidavits that support your case.
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Complete the Request: Use IRS Form 12661, “Request for Audit Reconsideration,” or submit a detailed written letter to the IRS including your full name, Social Security number, tax year, and a clear explanation of why you believe the audit result is incorrect.
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Submit Your Request: Mail the completed form or letter along with your supporting documents to the address provided on your IRS audit notice or in the Form 12661 instructions.
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IRS Review: An IRS specialist will reevaluate your case based on the new information. This process can take several months depending on complexity and workload.
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Receive Outcome: The IRS will notify you of their decision by letter. They may adjust your tax liability, reduce or remove penalties and interest, or deny the reconsideration.
Who Can Request an Audit Reconsideration?
Anyone who has undergone an IRS audit and disagrees with the result—whether an individual taxpayer, small business owner, or corporation—can request audit reconsideration if they have new or overlooked information.
Tips for a Successful Audit Reconsideration
- Act promptly: While there’s no set deadline, it’s best to submit your request as soon as possible to speed processing.
- Be thorough: Clearly label and explain each piece of evidence you provide.
- Write clearly: Include a concise, polite letter that summarizes the reasons for your request.
- Keep copies: Retain copies of all submissions and correspondence.
- Follow up: If you don’t hear back after a few months, contact the IRS to check your request’s status.
Common Misconceptions and Mistakes
- Misconception: Audit reconsideration is the same as an appeal. Appeals address disagreements after formal IRS decisions, while reconsiderations focus on new evidence.
- Mistake: Assuming submitting a reconsideration stops IRS collections. Unless you request a collection hold separately, IRS collection efforts continue.
- Mistake: Sending incomplete or messy documentation can delay or harm your case.
Real-Life Examples
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Example 1: Sarah’s IRS audit disallowed certain business expenses due to missing receipts. After finding the original receipts, she submitted them with her reconsideration request. The IRS accepted the new evidence and lowered her tax bill accordingly.
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Example 2: Mike was taxed on income the IRS believed came from a side job. He provided bank statements proving those funds were gifts and succeeded in having the IRS remove that income from consideration.
Frequently Asked Questions
Can I submit new evidence during the original audit? Yes, always provide all relevant evidence during the audit whenever possible. Audit reconsideration is for after the audit has closed.
How long does audit reconsideration take? Typically several months, but timelines vary.
Does reconsideration stop IRS collection efforts? No, unless you request a collection hold separately.
Summary Table
| Step | Action | Tip |
|---|---|---|
| Identify Issue | Review audit report for errors | Take detailed notes |
| Gather Documents | Collect and organize new evidence | Make legible copies |
| Submit Request | Use Form 12661 or letter with documents | Follow IRS instructions |
| IRS Review | Wait for IRS to reevaluate your case | Be patient and persistent |
| Receive Outcome | Review IRS decision letter | Keep records safely |
For more detailed information and official forms, visit IRS Audit Reconsideration and review IRS Form 12661 instructions at IRS Form 12661.
By understanding and correctly using the audit reconsideration process, taxpayers have a valuable option to correct IRS audit results, reduce their tax liability, and resolve disputes more fairly.