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Tax Attorney – Bellevue And Seattle IRS Audit Reconsideration

Even after a liability has been properly assessed by the IRS, the taxpayer may still be able to challenge the liability. This is referred to as an “audit reconsideration.” If successful, the tax liability will be adjusted accordingly by the IRS. A taxpayer may request that the matter be sent (back) to the examination function for a redetermination of the liability, even after receiving a collection notice. This is accomplished by simply making a written request to the Service employee handling the matter, indicating that one of the circumstances for doing so applies. It should be mentioned that the IRS is not required to suspend collection activity while the audit reconsideration is approved, so often an installment agreement must be made until the matter can be resolved.

The circumstances for audit reconsideration, include but are not limited to:

  • The liability has not been finally determined by means of a closing agreement, court decision, OIC, etc.
  • The taxpayer requests in writing that an assessment be abated based upon information not previously considered which, if timely submitted, would have resulted in a change in the assessment.
  • There was a Service computational or processing error in adjusting the tax.
  • The taxpayer never received notification of a balance of unpaid tax due prior to action by the collection function.
  • The taxpayer did not appear for the audit or examination of his return.
  • The taxpayer filed a delinquent return after the Service filed a Substitute for Return per section 6020(b).
  • The taxpayer moved since filing the return that gave rise to the delinquency and never received the statutory Notice of Deficiency.
  • If the delinquent tax derives from a failure by the taxpayer to substantiate deductions, he never had the opportunity to submit the necessary substantiation and he now has the necessary documents.

If the Revenue Officer returns the matter to the examination division, the Service will sometimes suspend further collection activity while the matter is under consideration, but they are under no legal obligation to do so. If the examination function determines that the underlying tax should be adjusted, the collection officer will take whatever action is required.