Tax Lawyer's Blog

Audit reconsideration (PDF) is a procedure designed to help taxpayers who disagree with the results of:

1. An assessment IRS made because of an audit of your tax return; or

2. A return IRS created for you (Substitute For Return – SFR) because you did not file a tax return.

The Audit Reconsideration process allows the IRS to informally reconsider a taxpayer’s tax records.

Many cases are resolved at the Audit Reconsideration level.

Applying for Audit Reconsideration

If you have paid your tax debt, you must file a formal claim for refund in order to initiate the Audit Reconsideration process.

This claim is made on Form 1040X  – Amended U.S. Individual Income Tax Return  (PDF).

The IRS will accept your audit reconsideration request if:

1. You submit information that the IRS has not considered already considered which might change the amount of tax you owe or credit you believe you are entitled to.
2. You filed a return after the IRS completed a return for you.
3. You believe the IRS made a computational or processing error in assessing your tax; or
4. Your liability is unpaid or your credits are denied.

What are Substitute for Returns (SFR)?

The most frequent use of the Audit Reconsideration process we see is when the IRS prepares a non-filing taxpayer’s tax returns for him or her.

These IRS prepared returns are called Substitute For Returns or SFRs and the IRS is authorized to prepare and issue them under IRC § 6020(b).

The taxpayer must prepare and file the correct returns.

When that is done the IRS sends those returns to the Audit Reconsideration division.

Advice

If you have been audited or the IRS has prepared a tax return for you, do not stop searching for your tax records. 

When you find them immediately contact an experienced tax professional and inquire about the availability of an audit reconsideration.

Even if you don’t find your original receipts, it is probably worth your while to consult with a tax pro because he or she will be able to advise you about the alternative types of evidence the IRS will accept in an audit reconsideration case.

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