An IRS audit can be stressful, especially when it ends with an unexpected tax bill, penalties, or interest you believe are wrong. Many taxpayers assume that once an audit is over, there’s no way to challenge the outcome unless they go to Appeals or Tax Court. Fortunately, that’s not always true.
The IRS offers a lesser-known option called audit reconsideration, which allows taxpayers to request a review of a completed audit when new information becomes available or mistakes were made. Understanding what to do when the IRS audits you, when reconsideration applies, and how it compares to other remedies can help you correct errors and potentially reduce what you owe.
This guide explains how audit reconsideration works, who qualifies, and how it fits into the broader IRS dispute process.
What Triggers an IRS Audit in the First Place?
Before diving into reconsideration, it helps to understand what triggers an IRS audit. Audits are often the result of inconsistencies or red flags in a tax return, not random selection.
Common audit triggers include:
- Income that doesn’t match IRS records from W-2s or 1099s
- Large deductions relative to reported income
- High business expenses without sufficient documentation
- Unusually large charitable contributions
- Repeated losses from a business or rental activity
If the IRS disallows deductions or adds income during the audit, the resulting assessment may be higher than it should be—especially if documentation wasn’t available at the time.
When Audit Reconsideration Makes Sense
Audit reconsideration is appropriate when a completed audit resulted in an incorrect or incomplete assessment and the IRS is still trying to collect the balance. While it’s not a guaranteed right, the IRS will often review requests submitted with proper documentation.
Taxpayers commonly seek reconsideration when:
- They never received audit notices and didn’t participate in the exam
- They missed deadlines due to illness, emergencies, or life events
- Supporting documents were unavailable during the audit
- The IRS misunderstood records or made calculation errors
For example, a self-employed taxpayer who failed to attend an audit appointment may have had all business expenses disallowed. Submitting receipts, mileage logs, and bank statements through reconsideration can significantly reduce or eliminate the assessment.
Situations Where Audit Reconsideration Is Not Allowed
Not every audit outcome can be reopened. The IRS generally will not accept reconsideration if:
- The tax was already paid in full
- You signed a final agreement resolving the audit
- The assessment resulted from final partnership adjustments
- A court has already issued a final ruling
If you’ve already paid the tax, the correct approach is typically to amend your tax return.
How to Amend a Tax Return
To amend a tax return, you need to file Form 1040-X, which allows you to correct errors or update information on a previously submitted return. When completing the form, clearly explain the changes and attach any supporting documents. Once filed, the IRS typically takes 8–12 weeks to process an amended return, so it’s important to keep copies for your records and monitor the status online.
Audit Reconsideration vs. Other IRS Remedies
It’s important to choose the right process for your situation.
When to Amend a Tax Return
If the issue stems from an error you made on your original return—such as forgetting income, claiming the wrong filing status, or missing a dependent—filing an amended return is usually the correct solution.
Appeals and Tax Court
When disputes involve interpretation of tax law rather than missing documentation, Appeals may be more appropriate. If Appeals fails, taxpayers may ask, what is Tax Court? Simply put, Tax Court is a federal court that allows taxpayers to challenge IRS determinations without paying the tax upfront, but it is more formal, time-consuming, and legally complex than reconsideration.
Audit reconsideration, by contrast, focuses on correcting factual or documentation issues without court involvement.
How Do I Request an Audit Reconsideration?
A successful request requires preparation, organization, and clarity.
Step 1: Gather Strong Documentation
The IRS will not change an audit result based on explanations alone. You must provide proof, such as:
- Receipts and invoices
- Bank and credit card statements
- Mileage logs
- Corrected W-2s or 1099s
- Proof of dependents, education, or medical expenses
Organize documents by category and label them clearly to help the examiner review your case efficiently.
Step 2: Write a Clear Explanation Letter
Your letter should identify the tax year, explain what items you disagree with, and reference the documents that support your position. Be specific about what the IRS got wrong and why.
Step 3: Submit the Request
Mail or fax your reconsideration packet to the IRS office listed on your audit report or most recent notice. Include copies—not originals—of all documents and consider using certified mail for confirmation.
What Happens After You Submit?
Once received, the IRS assigns your request to an examiner, often the same one who handled the original audit. They will compare your new evidence with the audit findings and may contact third parties to verify information.
Possible Outcomes
Audit reconsideration can result in:
- A full adjustment, reversing the audit entirely
- A partial adjustment, correcting some items
- No change, if the IRS finds the evidence insufficient
If successful, penalties and interest may be reduced, and payment plans may be revised accordingly.
How Long Does Audit Reconsideration Take?
While the IRS often cites a 30-day response window, actual processing can take several months depending on workload, complexity, and documentation quality. You can monitor progress through IRS transcripts or by contacting the number on your notice.
Your Rights During the Process
Taxpayers retain important protections during reconsideration. While collections don’t automatically stop, the IRS frequently places temporary holds on levies or garnishments during review. You also have the right to representation by a CPA, Enrolled Agent, or tax attorney.
If delays or hardship occur, you may request help from the Taxpayer Advocate Service or escalate the matter to Appeals if necessary.
Common Mistakes to Avoid
To improve your chances of success:
- Never send original documents
- Avoid submitting partial or unclear proof
- Clearly explain each disputed item
- Respond promptly to IRS follow-ups
- Continue installment agreement payments if applicable
Ignoring requests or defaulting on payments can result in immediate collection actions—even while reconsideration is pending.
Frequently Asked Questions
What to do when the IRS audits you and you disagree with the outcome?
Start by reviewing the audit findings and determining whether missing documentation or IRS errors caused the assessment. Audit reconsideration may allow you to correct the result without going to Appeals or Tax Court.
What triggers an IRS audit most often?
Mismatched income records, unusually large deductions, high business expenses, and unreported income are common triggers.
How to amend a tax return instead of requesting reconsideration?
Use Form 1040-X if you need to correct errors on your original return, especially if the audit issue was caused by your own filing mistake.
What is Tax Court and when is it used?
Tax Court is a federal court where taxpayers can dispute IRS determinations after Appeals. It’s typically used for legal disputes rather than documentation issues.
Final Thoughts
IRS audit reconsideration is one of the most effective tools for correcting inaccurate audit results without court involvement. Whether you missed deadlines, lacked records, or discovered new evidence later, reconsideration offers a second chance to set the record straight. With careful preparation and timely responses, it can resolve audit issues and significantly reduce your tax burden.