Generally, once the IRS makes an assessment the taxpayer must pay the assessment and file suit in order to challenge the assessment. The taxpayer, however, does have other options rather than paying the tax. One option is to request audit reconsideration. Audit reconsideration is available when there has been a communication problem between the taxpayer and the IRS, or the taxpayer has chosen to ignore a statutory notice of deficiency. In some cases, the IRS has permitted audit reconsideration of returns after collection has begun. It is important to gather as much information as possible about the year in question to show a need for audit reconsideration. A taxpayer should always ask for audit reconsideration. The worst that can happen is the IRS denies audit reconsideration. If this happens, the taxpayer should ask for an appeals conference.
The following three requirements must be met to receive audit reconsideration after collection has begun:
1. The taxpayer has changed addresses since the original tax return was filed; therefore, the deficiency notice was not sent to the taxpayer's new address.
2. The taxpayer has not received any notification from the IRS of the assessment or as to how the assessment was determined prior to receipt of the bill.
3. The taxpayer has not had an opportunity to submit any required substantiation to tell his side of the story.
Reasons for Audit Reconsideration Request (IRM 126.96.36.199):
1. The taxpayer did not appear for the audit.
2. The taxpayer moved and did not receive the correspondence from the IRS.
3. The taxpayer has new documentation to present.
4. The taxpayer disagrees with an assessment from an audit of the taxpayer's return and has additional information to be considered.
5. The taxpayer disagrees with an assessment created under the authority of Section 6020(b).
6. The taxpayer has been denied tax credits such as EITC claimed during prior examination.