Examination Reconsideration is a valuable option for taxpayers who disagree with the results of an IRS audit. It provides a formal way to request a fresh review of the audited tax return by submitting new evidence or correcting errors discovered after the audit.
Why Does Examination Reconsideration Exist?
The IRS understands that audits may sometimes overlook important details or that taxpayers might not have had all relevant documents available during the original audit. Examination Reconsideration ensures fairness by giving taxpayers a chance to present additional facts that could change the audit’s conclusions.
How to Request Examination Reconsideration
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Identify the Disagreement: If the IRS audit results in additional tax owed or penalties you believe are incorrect, consider requesting reconsideration.
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Prepare Your Request: Submit Form 4549-A (Income Tax Examination Changes) if you received it during the audit or send a detailed letter explaining why you disagree with the findings. Attach any new evidence such as receipts, bank statements, or other supporting documents that were missing previously.
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New Evidence is Key: The IRS requires new information that was not part of the initial audit to reopen the case. Simply re-submitting previously reviewed documents is unlikely to change the outcome.
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IRS Review Process: Upon receiving your request, the IRS assigns a different examiner—one who did not participate in the original audit—to ensure impartiality.
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Decision Outcome: The IRS may adjust your tax balance by reducing or removing assessed taxes or penalties if your new evidence supports your claim. Alternatively, the agency may uphold the original audit findings.
Who Qualifies for Examination Reconsideration?
Any taxpayer—individuals, self-employed persons, or small business owners—who disagrees with an audit result and has new evidence can apply. However, it is not intended for disputing penalties unless supported by new facts.
Tips for a Successful Reconsideration
- Act Promptly: While the IRS doesn’t state a fixed deadline, initiating reconsideration sooner improves your chances.
- Gather Strong Documentation: Provide clear, relevant proof such as invoices, receipts, or bank records that were omitted initially.
- Communicate Clearly: Explain your position simply and organize your supporting materials logically.
- Seek Professional Assistance: Tax professionals or enrolled agents can offer valuable guidance throughout the process.
- Manage Payments Carefully: If the IRS demands payment despite your disagreement, weigh the option of paying first then seeking a refund after reconsideration, considering your financial situation.
Common Missteps to Avoid
- Assuming you can revise the entire tax return instead of the specific audited issues.
- Giving up after the initial audit instead of pursuing reconsideration.
- Resubmitting evidence already reviewed during the audit.
- Expecting an automatic reversal without presenting compelling new information.
Real-World Example
Sarah was audited and faced an extra $1,200 tax bill because some business expense receipts were missing. After locating the receipts post-audit, she submitted an examination reconsideration request with this new evidence. The IRS accepted her documentation and removed the $1,200 charge.
Frequently Asked Questions
How long does examination reconsideration take?
The process can take several months since the IRS assigns a new examiner to review your case independently.
Can I appeal if I disagree with the reconsideration decision?
Yes, you can escalate the dispute to the IRS Office of Appeals if the reconsideration outcome remains unsatisfactory.
Do I need a lawyer or tax professional for this?
Professional assistance is not mandatory but can improve your presentation and guide you effectively.
Summary Table: Examination Reconsideration Overview
| Topic | Details |
|---|---|
| Purpose | Request IRS to review audited return again |
| When to Use | Disagree with audit findings and have new evidence |
| How to Request | Submit Form 4549-A or detailed letter with proofs |
| Who Can Use | Individuals, self-employed, and small businesses |
| Possible Outcomes | Tax or penalties reduced, unchanged, or affirmed |
| Timeframe | Several months, varies case by case |
| Next Step if Denied | Appeal to IRS Office of Appeals |
Additional Resources
If you’ve received an IRS audit notice and believe that pertinent information was overlooked or errors occurred, consider requesting Examination Reconsideration. This process offers a practical way to challenge audit results by presenting new evidence and potentially reducing your tax liability.