It’s stressful dealing with an IRS audit. It’s more stressful knowing the audit resulted in an incorrect tax assessment or tax liability. Many taxpayers are left feeling confused after receiving an audit report, unsure of how to correct errors or provide supporting documentation. Fortunately, the Internal Revenue Service offers a way to dispute audit results. This is the audit reconsideration process.
One essential tool in this process is the IRS Audit Reconsideration Form 12661, also called the Disputed Issues Verification form. This form allows you to clearly identify the errors made during the audit assessment. With this form, you can potentially reduce or eliminate additional tax liability added during your income tax examination.
If you’ve been audited and disagree with the IRS findings, Victory Tax Lawyers can help you file a strong audit reconsideration request. Contact us today for a free consultation and get experienced legal support on your side.
In this article, you’ll learn how to properly complete Form 12661, and the key steps in the audit reconsideration process. You’ll also learn what happens after your reconsideration request is submitted.
What Is IRS Form 12661?
IRS Form 12661 is officially called Disputed Issue Verification. It is a key document in the audit reconsideration process used to formally disagree with the results of an IRS audit.
The purpose of Form 12661 is simple but crucial. It allows you to clearly identify the specific items on your audit report that you dispute and provide explanations or supporting documentation to back up your claims.
It is most commonly used after correspondence audits, office audits, or field audits, especially when they have new or overlooked supporting documents like bank statements, loan documents, or corrected tax return information.
Filing this form accurately and on time is critical. Mistakes or delays can result in the IRS denying your audit reconsideration request, leaving you responsible for additional tax liability or unpaid tax balances. That’s why it’s often helpful to have a tax attorney guide you through the process and make sure your case is handled properly.
When Should You Use Form 12661?
If you believe the IRS audit results are wrong, you should use Form 12661. The form is most helpful if you have new documentation or relevant documents that were not reviewed during the original income tax examination. For example, if you recently discovered bank statements, receipts, or loan documents that support your tax return position, you can submit them with your audit reconsideration request.
It’s also appropriate to use Form 12661 if you never received the original audit notice or were unable to respond because of circumstances beyond your control. Many taxpayers file a reconsideration request after missing their audit appointment or failing to respond by the audit deadline.
You can also file this form if you simply disagree with the IRS audit report or believe the tax assessment includes disputed issue verification errors, such as miscalculations or improper disallowances of deductions or tax credits.
However, there are times when Form 12661 is not the right tool. You cannot use it if you’ve already signed a closing agreement, accepted a final determination, or resolved your case through the United States Tax Court. Likewise, audit reconsideration is not a substitute for filing an offer in compromise or initiating the formal appeals process.
How to Fill Out IRS Form 12661
Filling out IRS Form 12661 properly is essential if you want your audit reconsideration request to be taken seriously by the Internal Revenue Service. Here’s a step-by-step guide on how to complete it correctly.
1. Start With Your Taxpayer Information
You’ll need to provide your full legal name, your taxpayer identification number (usually your Social Security Number), and the specific tax year you are disputing. Accuracy in this section is crucial, as it helps the IRS quickly locate your tax return and audit assessment records.
2. Complete the Issue Summary Section
This part of the form asks you to explain exactly which parts of your audit report you disagree with. Be clear and specific. Identify each item the IRS changed, such as a disallowed deduction or unreported income, and briefly state why you believe it was incorrect.
3. Move On to the Explanation of Dispute Section
Stay factual, clear, and to the point. Reference any supporting documents you are submitting, such as bank statements, loan documents, receipts, or contracts, to help the IRS understand your position.
4. Attach Your Supporting Documentation
Carefully label each document and make sure it directly corresponds to the disputed issue. Refer to these documents in your explanation so the IRS agent reviewing your case can easily verify your claims.
Supporting Documents Needed for IRS Audit Reconsideration Form 12661
Simply disagreeing with the audit report isn’t enough. You must prove your position with solid records. Some of the most common supporting documents include:
- W-2s and 1099s to verify reported income
- Receipts and invoices for deductions and business expenses
- Bank statements and contracts to confirm financial transactions
- Loan documents for debt-related claims
- Affidavits or letters of explanation in cases where clarification is needed.
It’s important to keep your documents clearly labeled and organized by disputed issue verification. Make sure you reference each document in your explanation on Form 12661 so the IRS can quickly understand and verify your claims.
But you don’t have to go through the stress of assembling all this paperwork on your own. At Victory Tax Lawyers, our tax attorneys help you gather the correct supporting documents, organize them properly, and submit a complete, accurate audit reconsideration request.
Where and How to Submit Form 12661
Once you’ve completed IRS Form 12661 and gathered your supporting documentation, the next important step is submitting it to the right place. In most cases, you should send your audit reconsideration request to the address provided on your original IRS audit notice. The Internal Revenue Service typically includes mailing instructions in the audit correspondence. Simply follow the directions so your request reaches the appropriate IRS office.
Currently, the IRS does not allow you to submit Form 12661 online. Some cases may allow for fax submission if specified in your audit letter, but this is less common. The best method is to send your reconsideration request by certified mail with a return receipt. This way, you have proof of when and where you sent the form, which can be valuable if there are delays or follow-up questions.
Always make copies of everything you submit, including Form 12661, your audit reconsideration letter, and all supporting documents.
What Happens After You Submit It?
After you file your audit reconsideration request using IRS Form 12661, the Internal Revenue Service will begin reviewing your case. Processing usually takes between 30 to 60 days, though more complex cases or incomplete submissions can take longer.
Once the IRS reviews your supporting documentation and audit report, there are a few possible outcomes. In some cases, the IRS agrees with your explanation and adjusts your tax assessment, reducing or eliminating the additional tax liability. If they disagree, they may deny your reconsideration request and leave the original tax liability in place. It’s also common for the IRS to contact you asking for additional documents before making a final decision.
You’ll receive notification of the outcome through a written letter or notice from the IRS. This letter will explain whether or not your tax return has been adjusted or if your audit reconsideration case has been denied. It also gives directions on any next steps you may take.
What If the IRS Audit Reconsideration Is Denied?
If the IRS denies your audit reconsideration request, you still have options to challenge the tax assessment. One option is to request an appeal through the IRS Office of Appeals, which offers an independent review of your case. This can give you a second opportunity to present your case without going to court.
Another route is to pay the tax bill and file a refund claim using IRS Form 843. This allows you to seek a refund after payment, especially if you can later present stronger evidence or clarify errors made during the audit assessment.
You also have the right to seek professional help. A qualified tax attorney can help you explore your legal options, represent you in appeals conferences, or negotiate a settlement with the IRS. At Victory Tax Lawyers, our team specialises in negotiating with the IRS and providing strategic guidance in difficult cases. We know how to build strong cases and communicate effectively with the IRS to reduce or eliminate tax liability.
Tips for a Successful Audit Reconsideration
There are a few essential steps you should follow to improve your chances of success when filing an audit reconsideration request.
- Keep All Records and Correspondences – Always maintain copies of your tax return, supporting documents, and any correspondence with the Internal Revenue Service. Well-organized paperwork will make your case easier to review and reduce processing delays.
- Be Honest and Accurate – Providing truthful and precise information on Form 12661 is critical. Any inaccuracies or misleading claims can quickly lead to rejection or even additional penalties.
- Don’t Delay Your Request – Timing is crucial. File your reconsideration request as soon as you realize the audit assessment is incorrect. Waiting too long can make it harder to challenge the tax assessment and may increase interest on any tax balance.
- Seek Professional Help – If you’re unsure about any part of the process or your rights under tax law, consulting a tax attorney can help you avoid costly mistakes. A legal professional can guide you through the process and communicate with the IRS on your behalf.
Have Questions About Audit Reconsideration?
If you’re dealing with an IRS audit and disagree with the outcome, knowing when and how to use Form 12661 can make all the difference. The sooner you act, the better your chances of reducing or eliminating unnecessary tax liability. By submitting accurate information, strong supporting documentation, and following the correct procedures, you can avoid costly penalties and fix errors made during your audit assessment.
Disagree with the IRS? Our tax attorneys at Victory Tax Lawyers are ready to challenge the IRS on your behalf and fight for the best possible outcome. Book your free consultation today.
Frequently Asked Questions
Here are answers to some of the most common questions taxpayers ask about IRS Form 12661 and audit reconsideration requests.
1. What if I Never Received the Original Audit Report?
If you never received your audit report, you can still request an audit reconsideration. In your reconsideration request, explain that you didn’t get prior notice. Also, provide any supporting documentation that could change the IRS’s original findings.
2. How to File an Audit Reconsideration with the IRS?
You can file an audit reconsideration by submitting IRS Form 12661 along with your supporting documents to the IRS office listed on your audit letter. Always include a written explanation and copies of relevant records to strengthen your case.
3. How Do I Write a Reconsideration Letter to the IRS?
A good audit reconsideration letter clearly states which items you dispute, explains why you disagree, and references your supporting documentation. Stay factual, avoid emotional language, and be concise.
4. Can I Submit IRS Form 12661 Online?
Currently, the IRS does not accept Form 12661 online. The safest option is to send it via certified mail with a return receipt, so you have proof of delivery.
5. How Long Does an Audit Reconsideration Take?
The IRS audit reconsideration process usually takes 30 to 60 days, but it can be longer if your case is complex or if additional documents are requested.
6. Is IRS Form 12661 the Same as an Appeal?
No. Form 12661 is for audit reconsideration and is different from a formal appeal. If your reconsideration request is denied, you may still have the option to request an appeal through the IRS Appeals Office.
