IRS Audit Reconsideration: IRM 4.13 Workflow for Practitioners

Audit reconsideration under IRM 4.13.1 (updated December 2025) is the primary administrative mechanism for disputing a tax assessment after the examination process has closed and a liability has been entered on the IRS's books. It is also one of the most frequently misused tools in tax practice: practitioners file Form 1040-X after an assessment, confuse the SFR original-return pathway with the general reconsideration process, or fail to monitor the CSED while the review is pending. This guide is written for enrolled agents, CPAs, and tax attorneys who need a procedurally precise reference for every step of the reconsideration workflow, from identifying whether reconsideration is available, to drafting the request letter, tracking the review period, and advising clients when the IRS denies the request.

All procedures, statutory citations, and regulatory guidance in this guide must be verified at IRS.gov and under the current version of IRM 4.13.1 (updated December 2025) before being relied on in any specific client matter. IRM provisions are updated periodically, and any procedural detail printed here may be superseded.

This guide is for informational purposes only and does not constitute legal or tax advice. Audit reconsideration outcomes are fact-specific and subject to IRS administrative discretion.

Section 1: What Audit Reconsideration Is and When It Applies

Audit reconsideration is an IRS administrative process that allows a taxpayer to dispute an existing assessment when they have new information or documentation that was not considered during the original examination. It is not an appeal, not a Tax Court proceeding, and does not require the taxpayer to have exhausted any other remedy. It is a second administrative look at the underlying facts, initiated by the taxpayer and governed by IRM 4.13.1 (updated December 2025).

When levy action or lien issues are present alongside the underlying assessment dispute, see also our Collection Due Process (CDP) hearing practitioner guide, which addresses the statutory right to independent review of IRS collection action. CDP is a distinct process from reconsideration: CDP applies at the levy or lien stage and tolls the CSED, whereas audit reconsideration operates at the assessment level and does not toll the CSED.

When Audit Reconsideration Applies

• Default assessment after no response: The taxpayer did not respond to the examination notice and the IRS assessed a deficiency by default (TC 300 on the account transcript). The taxpayer now has documentation that would change the examination result.
• Disagreement without Tax Court petition: The taxpayer received the examination report (Form 4549), disagreed with the result, but did not file a Tax Court petition within the 90-day window on the Statutory Notice of Deficiency. The assessment has been entered and collection is pending.
• Substitute for Return (SFR) assessment: The IRS filed a return on behalf of the taxpayer under IRC 6020(b) and assessed tax. The taxpayer has an original return to file. Note: this pathway is handled differently from general reconsideration -- see Section 6.
• New documentation has emerged: Documentation that would have changed the examination outcome was not available, not presented, or not considered during the original examination, and the taxpayer can now submit it.

When Audit Reconsideration Does NOT Apply

• Issues already decided by Tax Court: If the Tax Court has entered a decision on the underlying liability, that decision is final and binding. Audit reconsideration does not override a Tax Court judgment.
• Issues decided in a prior Appeals conference (generally): If the taxpayer had an Appeals conference and the specific issues in dispute were decided there, audit reconsideration is generally not available to relitigate those same issues. New information or new issues not raised at the prior Appeals conference may still qualify.
• No new evidence: The taxpayer simply wants to pay less without presenting new documentation that changes the factual basis of the assessment. Disagreement with the IRS's legal position, without new facts or documentation, is not a basis for reconsideration.
• Bankruptcy automatic stay: If a bankruptcy automatic stay is in place, collection action is stayed under 11 U.S.C. 362 as a matter of law. Coordinate with bankruptcy counsel before initiating reconsideration while the automatic stay is active.

Section 2: The Critical Form 1040-X Distinction

The single most common practitioner error in audit reconsideration cases is filing Form 1040-X (Amended U.S. Individual Income Tax Return) after the IRS has assessed the tax. Understanding why this does not work, and what the correct mechanism is, is foundational to representing clients in post-assessment disputes.

When Form 1040-X Is Correct

Form 1040-X is the correct instrument when the taxpayer wants to correct a filed return and no assessment has been entered yet, or when the IRS has issued a Statutory Notice of Deficiency but the 90-day petition window has not yet expired and the assessment has not been entered. It is also appropriate when the taxpayer is claiming a refund for an overpayment on a return for which no disputed deficiency assessment exists.

Why Form 1040-X Fails After Assessment

Once the IRS assesses a tax liability (recorded as TC 150 for original return assessments, TC 290 for additional assessments, or TC 300 for audit assessments on the Account Transcript), the assessment is a final administrative act. It creates an immediately enforceable obligation under IRC 6303 and starts the 10-year CSED clock.

Filing Form 1040-X after that point enters an amended return into the IRS system and a transcript entry will appear. But the amended return does not supersede the existing assessment. The balance due on the assessment remains on the books, and IRS collection action continues based on the assessed amount, not the amended return.

The Correct Path After Assessment

To reduce an assessed liability, the available administrative paths are:

• Audit reconsideration (IRM 4.13.1, updated December 2025): for assessments where new documentation is available and the taxpayer did not have a prior Appeals conference on those issues.
• Tax Court petition: only if within the 90-day Statutory Notice of Deficiency period, or if a new deficiency notice is issued during the reconsideration process.
• Offer in Compromise (doubt as to liability): available where the taxpayer disputes the correctness of the assessed liability, under separate OIC procedures.
• Refund suit in district court or Court of Federal Claims (28 U.S.C. 1346(a)(1)): after paying the liability in full and filing a proper refund claim.

Section 3: How to Request Audit Reconsideration Under IRM 4.13.1

There is no official IRS form for requesting audit reconsideration. The request is a written letter addressed to the IRS campus or examiner that handled the original assessment. The absence of a formal form creates both flexibility and risk: flexibility because the practitioner can frame the request precisely around the facts, and risk because an incomplete request may be rejected or delayed. Every element described below should be present in the initial submission.

Where to Send the Request

Address the reconsideration request to the IRS campus that issued the assessment. The campus address appears on the examination report, the deficiency notice, or the balance-due notice. If the case has been assigned to a specific revenue agent or examiner and the case is still within that function, the request may also be sent to the assigned examiner's address. When in doubt, send the request to the campus address listed on the most recent IRS correspondence regarding the examination.

Required Elements of the Request Letter

A complete reconsideration request must contain:

• Taxpayer identification: Full name, Social Security Number or EIN, and the tax year(s) at issue.
• Assessment reference: The specific assessment date and amount, drawn from the Account Transcript or the examination report. Reference the TC 300 or TC 290 date and, if available, the examination report number.
• Disputed items: Specific identification of the items being disputed, with reference to the prior examination report (Form 4549) line items. Vague statements are insufficient; the request must identify each specific item.
• Basis for reconsideration: A clear explanation of why the original examination result was incorrect, tied to the specific documentation being submitted.
• Supporting documentation: All records, receipts, statements, or other documentation that would have changed the original examination outcome and were not previously considered by the examiner.

What to Include with the Request

• Form 2848 (Power of Attorney and Declaration of Representative): Required for any representative who will communicate with the IRS on the case. Submit Form 2848 simultaneously with the reconsideration request, not after the IRS schedules the review.
• Copies of prior examination reports: Include a copy of Form 4549 (Income Tax Examination Changes) from the original examination. The reconsideration officer uses this to identify what was assessed and match the disputed items.
• All supporting new documentation: Submit a complete package with the initial request. The reconsideration process is generally not iterative; do not plan to supplement the submission after the fact.

How to Submit and Document the Filing

Send the reconsideration request by certified mail with return receipt requested. Retain the certified mail receipt, the return receipt card, and copies of every page submitted. The burden of demonstrating that a reconsideration request was timely submitted and complete falls on the taxpayer.

IRS Acknowledgment

When the IRS accepts a reconsideration request into the review queue, it will typically send Letter 2030 or a similar acknowledgment letter confirming receipt and assignment for review. The acknowledgment does not indicate agreement or approval; it confirms only that the request is in process. If no acknowledgment is received within 30 to 45 days of the certified mail delivery date, contact the campus for a status update.

Section 4: Form 12661 (Disputed Issue Verification)

Form 12661 (Disputed Issue Verification) is not the mechanism for requesting audit reconsideration. It enters the process after the request has already been accepted and assigned for review. Understanding its role, and its limitations, is essential to completing the reconsideration process correctly.

What Form 12661 Does

Form 12661 is used during the reconsideration review to document the specific items the taxpayer is disputing. The IRS reconsideration officer may send Form 12661 to the taxpayer or their representative to formally identify and confirm which line items from the prior examination report are at issue. It creates a precise record of the scope of the dispute, which the reconsideration officer uses to structure the review.

How to Complete Form 12661

Each entry on Form 12661 should correspond to a specific line item in the prior examination report (Form 4549). The form asks the taxpayer to identify each disputed item, the amount in dispute, and the documentation being submitted to support the revised position. Matching Form 12661 entries to Form 4549 line items precisely is important: it defines the scope of the reconsideration and ties each disputed amount to the specific examination adjustment it challenges.

Section 5: The 120-Day Review Timeline Under IRM 4.13.1

IRM 4.13.1 (updated December 2025) establishes a 120-day internal guideline for IRS to process and respond to audit reconsideration requests. Practitioners should understand both what this guideline does and what it does not do.

Nature of the 120-Day Guideline

The 120-day timeframe is an internal IRS processing standard, not a statutory deadline enforceable by the taxpayer. The IRS is not legally required to issue a determination within 120 days, and there is no automatic consequence if the IRS exceeds that period. Complex cases, cases with large documentation volumes, and cases routed to Specialty Examination functions commonly take longer than 120 days to resolve.

Collection During the Review Period

Under IRM 4.13.1, the IRS should suspend collection action on the amounts being disputed during the reconsideration review period. In practice, the IRS will generally hold levy action on the specific disputed amounts while the review is pending. However, this is an internal administrative practice, not a statutory collection suspension. It is not equivalent to the levy suspension that applies in a Collection Due Process hearing under IRC 6330. Collection action can resume, and the CSED continues to run uninterrupted throughout the review period regardless of any informal collection hold.

If the IRS Has Not Responded in 120 Days

When the IRS has not issued any response after 120 days from the acknowledgment letter date, practitioners have two primary options:

• Contact the Taxpayer Advocate Service (TAS): If the delay is causing financial hardship (for example, collection action is imminent, a federal tax lien is affecting a pending real estate transaction, or the client has an urgent need for relief), TAS can intervene with the IRS campus and request that the case be expedited. TAS assistance is available under IRC 7803(c).
• Contact the campus directly: Call or write the campus at the address listed on the reconsideration acknowledgment letter and request a status update. Document every contact attempt in the file.

IRS Response Options

When the IRS completes its reconsideration review, it will issue one of three outcomes:

• Full acceptance: The IRS accepts the taxpayer's position in full and abates the assessment. The balance due is removed from the account.
• Partial acceptance: The IRS accepts the taxpayer's position on some items but not others, and reduces the assessed amount accordingly. A revised balance due remains.
• Denial: The IRS denies the reconsideration request and the original assessment stands. See Section 8 for the options available after a denial.

Section 6: SFR Reconsideration -- The Original-Return Pathway

When the IRS files a Substitute for Return under IRC 6020(b) and assesses tax based on that SFR, the resolution pathway is distinct from both Form 1040-X and the general audit reconsideration process. Conflating these three pathways is a recurring source of practitioner error.

Filing the Original Return Displaces the SFR

If the IRS filed an SFR under IRC 6020(b) and assessed tax, the taxpayer's correct response is to file the original return for the tax year at issue. Not Form 1040-X. Not a reconsideration request letter. The original return the taxpayer should have filed in the first place.

Under the mechanics of IRC 6020(b), the taxpayer's original return, once processed, replaces the SFR assessment. The original return is not an amended return; it is the return. The IRS processes it, enters the resulting tax as the taxpayer's actual return (TC 150 on the Account Transcript), and the SFR assessment is superseded.

CSED Consequences of Filing the Original Return

Filing the original return starts a new CSED from the TC 150 date of that return, which is the date the original return is processed and assessed by the IRS. This is a critical planning consideration: if the SFR-based CSED is close to expiring and the taxpayer files an original return, the CSED resets to 10 years from the new TC 150 assessment date. For a full analysis of CSED calculation and how the TC 150 assessment date controls the collection statute, see our CSED practitioner guide.

The Original Return May Result in a Higher or Lower Liability

A Substitute for Return is typically constructed from information the IRS received on third-party information returns (W-2s, 1099s, and similar documents). The IRS accounts only for income it can identify and applies no deductions, credits, or adjustments the taxpayer would have claimed. As a result, an original return that properly reflects the taxpayer's actual income and deductions will almost always result in a lower liability than the SFR. However, if the taxpayer had income not captured by the third-party information on which the IRS built the SFR, the original return could result in a higher liability. Prepare the original return accurately, with all income and all allowable deductions and credits, and advise the client of the outcome before filing.

What to Include When Filing the Original Return for an SFR Period

• The original return itself, prepared as though being filed for the first time for that year (not Form 1040-X).
• All supporting documentation the taxpayer would have included with the original return: W-2s, 1099s, receipts, records of deductions and credits claimed.
• A cover letter identifying the tax year, the fact that an SFR was filed under IRC 6020(b), and that this is the original return intended to replace the SFR.
• Form 2848 (Power of Attorney) if filing through a representative.

Section 7: Audit Reconsideration and the CSED

The interaction between audit reconsideration and the Collection Statute Expiration Date is one of the most strategically significant aspects of this process, and the area where practitioners most commonly fail their clients through inattention.

Audit Reconsideration Does Not Toll the CSED

Unlike a Collection Due Process hearing under IRC 6320 or 6330 (which tolls the CSED from the date Form 12153 is filed), an Offer in Compromise (which tolls the CSED from the date the IRS receives the OIC submission), or a bankruptcy proceeding (which tolls the CSED during the automatic stay), audit reconsideration under IRM 4.13.1 does not toll, suspend, or extend the 10-year collection statute. The CSED clock runs through the full reconsideration period, from the date the request is submitted to the date the IRS issues its determination and beyond.

Before initiating reconsideration, pull the Account Transcript, compute the adjusted CSED for each assessment (accounting for any existing tolling events), and note whether the CSED for any of the assessed amounts is within the reconsideration timeline. For a detailed treatment of CSED calculation, tolling events, and transcript codes, see our CSED practitioner guide.

CSED Strategy When the Statute Is Approaching Expiration

When the CSED for a disputed assessment is within one to two years of expiration, the practitioner must evaluate whether audit reconsideration is still strategically sound. Consider:

• If the CSED expires before the IRS resolves the reconsideration, the assessment becomes uncollectible by operation of law. The IRS loses its legal authority to collect by levy or court action, and must release any federal tax lien under IRC 6325(a)(1). Pursuing reconsideration actively in that window may not benefit the client if the statute will expire regardless.
• If the reconsideration is granted and the assessment is abated, the CSED issue becomes moot for that assessment. But if reconsideration is denied and the CSED has been running during the review period, the remaining collection window may be short.
• In some circumstances, allowing the CSED to expire while managing collection through currently-not-collectible status or a minimal installment agreement may be more valuable to the client than resolving the dispute through reconsideration. This is a case-by-case judgment that requires computing the CSED precisely, assessing the strength of the reconsideration case, and discussing the client's financial situation and long-term goals.

Section 8: What Happens After the IRS Denies Reconsideration

When the IRS denies an audit reconsideration request, the original assessment stands. The denial is not the end of the road, but the available next steps depend heavily on what has happened procedurally up to that point.

Appeal the Denial to the IRS Office of Appeals (IRM 5.1.15)

The taxpayer may appeal the reconsideration denial to the IRS Office of Appeals under IRM 5.1.15. This second administrative layer provides independent review by an Appeals Officer of both the underlying factual dispute and the procedural handling of the reconsideration. The Appeals conference provides an opportunity to present additional documentation, clarify disputed items, and negotiate a resolution.

If the taxpayer already had an Appeals conference on the same issues during the original examination, the ability to raise those same issues again in a post-reconsideration Appeals conference may be limited.

Tax Court (If Within the Petition Period)

If the IRS issues a new Statutory Notice of Deficiency in connection with or following the reconsideration process, the taxpayer has 90 days from the date of the new SNOD to petition the United States Tax Court. If a new SNOD is issued, the 90-day window must be calendared immediately. Tax Court is the primary judicial forum for contesting a federal income tax deficiency before payment.

Refund Suit in District Court or Court of Federal Claims

If all administrative avenues are exhausted, the taxpayer may pay the assessed liability in full and file a refund claim with the IRS. If the refund claim is denied or not acted upon within six months, the taxpayer may file a refund suit in United States District Court or the Court of Federal Claims under 28 U.S.C. 1346(a)(1). The refund suit is a judicial remedy but requires full payment first. Practitioners should discuss this option with clients who have exhausted the administrative reconsideration and Appeals processes and have the ability to make full payment.

Section 9: Common Practitioner Errors

The following errors appear repeatedly in audit reconsideration cases. Each one is avoidable with the procedural framework in this guide.

Filing Form 1040-X After Assessment

The most common error in post-assessment practice. Filing Form 1040-X after the IRS has assessed the tax does not reduce the assessed liability. The assessment remains on the books. If you have already filed Form 1040-X after assessment on a client's case, initiate audit reconsideration immediately. The Form 1040-X submission does not substitute for the reconsideration request.

Omitting Form 2848 from the Submission

Without a valid Form 2848 on file, the IRS reconsideration officer cannot communicate with the representative about the case. If Form 2848 is missing, the officer will attempt to contact the taxpayer directly, and the representative will be excluded from discussions until the authorization is corrected. Submit Form 2848 with the initial reconsideration request, not after the IRS schedules the review.

Not Tracking the CSED During Reconsideration

The CSED does not pause. If the reconsideration takes 9 to 12 months and the CSED was 14 months away at the start of the process, the window at denial may be too short to pursue Appeals meaningfully. Compute the CSED before initiating reconsideration and track it throughout.

Submitting an Incomplete Documentation Package

The reconsideration review is not typically an iterative process in which the IRS will request additional documents multiple times. Submit all documentation that supports the revised position in the initial submission. A partial submission that results in a partial denial may foreclose additional documentation opportunities in the same reconsideration cycle.

Raising Issues Not in the Original Examination

Audit reconsideration is limited to items that were part of the original examination and the resulting assessment. The taxpayer cannot use reconsideration to add a new deduction that was simply omitted from the original return but was never examined. New issues belong in a separately filed return (if the period is still open under the three-year refund claim statute of IRC 6511) or in a distinct administrative proceeding.

Conflating the SFR Pathway with General Reconsideration

When the IRS filed a Substitute for Return, the client files the original return. Not Form 1040-X, not an IRM 4.13.1 reconsideration letter. The SFR pathway and the general reconsideration pathway are distinct, and using the wrong mechanism creates delays and may result in the wrong type of IRS processing.

Frequently Asked Questions

Disclaimer: This guide is provided for informational purposes only and does not constitute legal or tax advice. IRM 4.13.1 was updated December 2025; verify all procedures and regulatory guidance at IRS.gov before relying on any detail in this guide in any specific client matter. IRM provisions are updated periodically and any procedural detail printed here may be superseded. Audit reconsideration outcomes are fact-specific and subject to IRS administrative discretion. Americas Tax Organization is an IRS Authorized e-file transmitter; this guide does not create a practitioner-client relationship.