The Internal Revenue Service (IRS) has the power to audit a taxpayer, and typically does so in a limited number of circumstances. The IRS will often audit high net worth individuals, taxpayers that claim huge charitable contributions, underreporting of income on the relevant tax form, taxpayers that claim huge business losses year after year, or other major unreimbursed business expenses. Forbes, “15 Ways To Invite An IRS Audit,” available at https://www.forbes.com/pictures/mjh45hdmf/write-off-big-unreimbursed-employee-business-expenses/. Once the audit occurs, however, that is not the end of the story; a taxpayer can request IRS audit reconsideration under certain circumstances.

There are a number of bases on which a taxpayer can request audit reconsideration. If the taxpayer did not receive an assessment notification prior to the Collection contact, if the taxpayer has moved since filing the return in question and as a result did not receive any IRS correspondence, if the taxpayer did not appear for the audit, or even if the taxpayer never had the opportunity to submit required substantiation but now has that documentation, audit reconsideration may be requested. Internal Revenue Service, Internal Revenue Manual, Audit Reconsideration 42 § 4:166, available at https://www.irs.gov/irm/part4/irm_04-013-001.html. Furthermore, if a taxpayer disagrees with an audit determination due to additional information later obtained, disagrees with a Notice of Deficiency assessment and wishes to submit another return to receive the appropriate assessment, wishes to claim certain tax credits previously denied, or submitted a document that was not considered, these are also grounds to request audit reconsideration. Id.

Taxpayers wishing to avail themselves of this audit reconsideration process will need to prepare a written document explaining the basis for the request for audit reconsideration, and will also have to submit supporting documentation in many cases. Taxpayers should also look to Publication 3598, “What You Should Know About The Audit Reconsideration Process,” to learn more about how to successfully navigate the process. That said, there is no substitute for retaining an experienced tax attorney that understands the nuances of audit reconsideration requests, and can marshal evidence effectively on the taxpayer’s behalf. Those wishing to engage in this process should at the very least contact an experienced tax attorney for an initial consultation, which will set them on the right path to a successful audit reconsideration application. Alternatively, taxpayers can consult the Taxpayer Advocate Service, which is an independent IRS organization that offers free assistance with confusing tax problems.

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Please keep in mind the information and advice presented in this blog is not intended to be used as formal legal advice. Contact a tax professional for personalized tax advice pertaining to your specific situation. While we try and answer all parts of the question when we write our blogs, sometimes there may be some left unanswered. If you have any questions about your problems with the IRS, SBOE, FTB, or BOE, or tax law in general, call RJS Law at (619) 595-1655.

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