Want a Second Chance to Win Your Audit? Audit Reconsideration May Be Your Answer
Have you ever wondered “If I’ve lost my IRS audit, can I have a second chance to fight it?” I’ll tell you.
Hi, I’m Jeff Fouts, a tax attorney located in metro Atlanta, with a nationwide law practice helping clients who have serious IRS problems.
So, “If you lost your IRS audit, can you have a second chance to fight it?”
The answer is…If you lost your IRS audit, you may not be out of luck. You may be a great candidate for an Audit Reconsideration.
Audit reconsiderations are just what they sound like – an opportunity for you to ask the IRS to take a second look at the results of your tax audit. In other words, you’re asking the IRS to reconsider the audit changes they made.
Audit reconsiderations are a possible tool to re-open your IRS audit that assessed additional taxes when you did not agree to the changes they made to your tax return. Let’s look at some specific situations:
- You’re audited, but you cannot locate the proof of your expenses for your business that you report on a Schedule C. The IRS closes the audit by not allowing all of the business expenses, and they issue a final audit report showing the bill for the additional taxes. Because you don’t agree with the audit changes, you don’t sign the final audit report. If you don’t appeal the audit changes, the IRS will assess the additional taxes within six months.
During this six-month period, you happen to locate your records in your attic. Once the audit changes have assessed, you may request that the IRS reconsider their decision.
- Another example might be where you received an IRS CP2000 matching audit letter, what I call a “robo-audit”, in the mail letting you know that the IRS doesn’t believe you reported all of your income. You read the CP2000 letter, but the more often you read it, the more confused you became.
A CP2000 letter requires that you respond within 30 days. Let’s assume you didn’t mail a response to the IRS. The IRS assumed that because you didn’t disagree with the proposed changes, you therefore must agree with the changes listed in the CP2000 letter, and they proceed to assess the additional taxes against you. They then send you a tax due bill.
Let’s pretend that after you receive the IRS bill for the tax changes, you take the CP2000 letter to a tax professional to review. The tax professional discovers that you did report the income which the IRS said you didn’t report on your tax return. The IRS simply failed to look in the right place. You can file an audit reconsideration asking that the IRS reverse the additional taxes.
- Another example might be where you received a bill from the IRS for a tax year that you thought had been paid in full. You contacted a tax professional to look into the matter. The tax professional discovered that IRS had audited you for a prior year and had assessed additional taxes against you. Let’s assume you had never received a notice from the IRS discussing an audit.
You moved frequently for your employer but you always filed your tax returns on time using your current address. Once the tax professional was able to obtain copies of your audit from the IRS, he was able to request an audit reconsideration because you were never given an opportunity to show your side of the facts during the audit because the IRS had failed to give you proper notice that they were going to audit you even though they had your address at the time. The IRS must send all IRS correspondence to your current address on file. One of the main ways you officially notifiy the IRS of an address change is by filing your tax returns on time with the new address or by mailing the IRS a Form 8822.
An Audit reconsideration is an excellent strategy which can allow you to have another chance to prove that your original tax return filing was correct and that the IRS is wrong in saying you owe them additional tax, penalties and interest.
However, I must caution you, the correct way to request an audit reconsideration varies, depending on how the IRS audited you.
I hope this important video tip has helped you understand the IRS a little better and about how tax problems are solved. Chances are you have questions or concerns about your own particular tax problem. What I encourage you to do is pick up the phone and call me. I can answer your questions. Over the past 20 years I’ve represented clients in all 50 states and 29 foreign countries, and I welcome your call. You can reach me at 888-995-6785 or by email at email@example.com. I’m Jeff Fouts and thanks so much for watching. Have a wonderful day.