Audit Reconsideration — Reopen a Completed Audit

Audit reconsideration is an IRS process that allows a taxpayer to request that the IRS re-examine a completed audit assessment when the taxpayer has new information that was not considered during the original audit, or when the taxpayer did not participate in the original audit — for example, because they did not receive or respond to the audit notice. Audit reconsideration is not an appeal (which challenges the audit result based on the evidence already in the record). It is a request to reopen the examination based on information the IRS did not have when it made its original determination. The IRS generally will consider audit reconsideration when the taxpayer provides new documentation supporting a different outcome.

Audit reconsideration may be appropriate when: you did not appear for the audit or did not respond to the audit report, resulting in a default assessment (often based on a Substitute for Return prepared by the IRS); you have new documentation that was not previously considered — such as business expense receipts, corrected 1099s, or proof of deductions; you believe the IRS made a computational or processing error; or you have paid the assessed amount in full and are seeking a refund. Audit reconsideration is generally not available if you already had a Collection Due Process hearing or U.S. Tax Court case covering the same tax year, or if you previously agreed to the assessment by signing IRS Form 4549 (Income Tax Examination Changes) and the period for filing an amended return has passed.

An IRS appeal challenges the audit result based on the evidence that was already presented — you argue that the IRS reached the wrong conclusion on the existing record. Audit reconsideration is different: it asks the IRS to reopen the case based on new information that was not available or not considered during the original audit. If the original audit proceeded without your participation because you did not receive the notice, audit reconsideration is generally the correct path — not appeals — because there was no hearing on the merits. Our team evaluates whether appeals or reconsideration is appropriate based on the specific facts of your case.

Audit reconsideration requests are generally made in writing — there is no single mandatory form for all cases, though the IRS has an informal Form 12661 for this purpose. The request should identify the tax year and type of tax at issue, explain why reconsideration is appropriate, and include copies of all supporting documentation. You may also need to file an amended return (Form 1040-X) showing the corrected tax liability. Our team prepares the complete reconsideration package — written explanation, amended returns where needed, and all supporting documentation organized in the format the IRS expects.

The documentation required depends on the specific issues being reconsidered, but generally includes: copies of IRS notices and the audit report (if you have them); amended tax returns (Form 1040-X) for each year being reconsidered showing the corrected liability; supporting documentation for claimed deductions, credits, or income adjustments — such as receipts, cancelled checks, bank statements, 1099 forms, W-2s, business records, mileage logs, and medical expense documentation; and a written statement explaining why each item was not properly considered in the original audit. The IRS will not reconsider based on general assertions — you need specific, documented evidence.

Audit reconsideration timelines vary based on case complexity, IRS workload, and whether the case is handled by the original examination function or a different IRS office. Cases involving Substitute for Returns — where the taxpayer did not participate in the original audit — tend to be more straightforward because the IRS's original assessment was based on limited information. Cases involving complex business deductions or multiple tax years may take longer. During your free consultation, we will assess the complexity of your situation and provide a realistic timeline estimate.

If the IRS agrees to reconsider: the original assessment may be adjusted or abated; penalties and interest may be reduced if the tax liability is lowered; and if you previously paid the assessed amount, you may be entitled to a refund of amounts overpaid. The IRS will issue a new examination report reflecting the reconsideration results. If you disagree with the reconsideration outcome, you retain standard appeal rights — at that point, you may request an appeals conference with the IRS Office of Appeals.

If the IRS denies audit reconsideration, the original assessment stands. Depending on the reason for denial, you may still have other options: if you received an appeals notice with the denial, you may appeal the denial itself; if the collection statute has not expired, the IRS may continue collection on the assessed amount; and if the denial was due to insufficient documentation, you may be able to resubmit with stronger evidence. Our team evaluates denial reasons and advises on the best next step.