Audit Reconsideration Request - John R. Dundon II, Enrolled Agent
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Audit Reconsideration Request

The Perturbing New Treatment of Patents Under the Tax Cut & Jobs Act (TCJA)

Audit Reconsideration Request

‘Audit reconsideration’ requests the IRS to reconsider action it has taken with the taxpayer by allowing the taxpayer to present information that may not have been available to the IRS previously. This procedure is used when an assessment has been made due to an audit of the taxpayer’s return or when the IRS has created a substitute for return (SFR) for the taxpayer because the taxpayer did not file a return, and IRS has evidence that a return should have been filed.

For Example, taxpayer A received a CP-2000 letter in 2009. The CP-2000 showed unreported business income of $20,000 for 2007. This information was provided to the IRS on Form 1099-MISC. Taxpayer A never opened the letter he received from the IRS with the CP-2000 enclosed and did not open the next two letters he received.

In the meantime, because IRS did not receive a response from the taxpayer, it assumed the income was 100% taxable as self-employment income and IRS made an assessment on the taxpayer’s account that included the additional income tax, self-employment tax plus penalties, and interest. In the meantime, the taxpayer had moved several times and did not receive the final assessment notice, or the intent to levy notice. Taxpayer

A was completely unaware that a final assessment had been made until his employer received a wage levy on his weekly wages. This wage levy was the wake-up call he needed to find out what was going on with his tax return. With this knowledge, the first thing Taxpayer A did was to seek a professional opinion.

It was determined that this assessment is a result of unreported income to the extent of $20,000. The taxpayer is an entertainer. After explaining to the taxpayer that he obviously had extra income in 2007, taxpayer insists he was only reimbursed for his travel expenses.

When explained to him that he had an obligation to report both the income and the expenses, he insists that he did not understand that and figured since he did not come out with any additional income it was not necessary to report anything. Here is where he went wrong. Fortunately it was an innocent mistake.

Since the tax payer kept very good records and receipts and copies of everything he submitted for reimbursement. With all the receipts and documentation in order the preparation of an audit reconsideration request is straight forward.

The request is as simple as writing a letter, stating all the pertinent facts, including the reason the taxpayer did not respond to the original notice, and the reason the information was not included in the original return. Include with the letter all copies of all the expenses that were not included on the original return to the IRS.

Your documentation must support your position that the tax assessment is in error. Include a copy of the examination report, Form 4549 (Income Tax Examination Changes), if you have that. Send the request to the IRS campus shown on the examination report.

If there is a collection officer handling the case, you can also submit your request through him or her. If there is more than one disputed issue, you need to provide complete information on each issue.

The IRS will consider each issue separately based on the information provided. If IRS needs further information, it will contact you. Make sure to include all your contact information in all correspondence you send.

It is usually best to have an enrolled agent such as myself write the letter on his/her letterhead. If you do your homework and have your documentation in order this is a relatively straight forward process. I’d be happy to walk you through it.



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