Understanding IRS Audit Reconsideration Process in Burbank, CA

Understanding IRS Audit Reconsideration Process in Burbank, CA

Receiving an IRS audit notification can be plenty nerve-wracking, especially for business owners and professionals in our vibrant Burbank community. Understanding the audit reconsideration process is crucial if you find yourself at a crossroads with the IRS. This article will guide you through every step, ensuring you know how to effectively address the situation.

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What is IRS Audit Reconsideration?

IRS audit reconsideration is a process that allows taxpayers to request a review of their tax liability after an audit has concluded. If new evidence is available or if you believe the original decision was incorrect, you may submit a request for reconsideration to potentially reduce your tax owed or negate findings entirely.

Key Benefits of Audit Reconsideration

• Opportunity to Present New Information: If you've acquired new documents or evidence since the audit's conclusion, this is your chance.
• Correction of Errors: The review can clear up any misunderstandings or mistakes made during the original audit.
• Debt Relief: Depending on the new findings, you might lower your tax obligation, relieving some financial stress.

With these benefits in mind, moving through the IRS audit reconsideration process can significantly impact your financial standing, especially if you’re located in areas like Toluca Lake, Glendale, or North Hollywood.

The Audit Process: An Overview

Before diving into reconsideration, it’s important to understand the fundamental stages of an audit:

1. Notification: You receive an IRS notification informing you that your tax return is being audited.
2. Information Requests: The IRS requests specific documentation to verify the accuracy of your return.
3. Audit Findings: After reviewing the provided documents, the IRS concludes the audit, issuing either a “no change” or “change proposed” letter.

After receiving a Notice of Deficiency, the taxpayer has 90 days to file a petition with the United States Tax Court if they disagree with the conclusions.

The Audit Reconsideration Process: Step-by-Step Guide

If you've had an audit and believe you have grounds for reconsideration, follow these steps:

Step 1: Collect New Evidence

Gather all new documents or evidence that supports your case. This might include:

• W-2s or 1099s that were not previously included.
• Bank statements that corroborate your claims.
• Any other supporting documentation relevant to the discrepancies raised by the audit.

Step 2: Complete Form 9423

To initiate the reconsideration process, complete IRS Form 9423, the Request for Appeal of a Claim Denial. You will need to include:

• Your tax information.
• An explanation of the new evidence.
• The reason you believe the audit decision was incorrect.

Step 3: Submit Your Request

Carefully review your submission and send it to the appropriate IRS address indicated on the form. Be sure to keep copies for your records.

Step 4: Await IRS Response

The IRS will contact you (generally within 30 days) regarding a decision on your request. Factors affecting response time include the complexity of your case and current IRS workload.

Important Deadlines and Considerations

• 93 Days to Respond: As a Burbank taxpayer, you should always respond promptly to any IRS communication.
• Keep Copies: Maintain copies of all correspondence with the IRS as a record for future reference.
• Consider Time Limits: Even though reconsideration allows for new evidence, there’s still a statute of limitations (typically within 3 years of assessment).

In California, tax regulations can be particularly complex. For state-related audits, you would coordinate with the California Franchise Tax Board and refer to CA Form 540 or DE-9 for payroll inquiries.

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Common Pitfalls in the Reconsideration Process

To navigate the reconsideration process smoothly, be aware of these common pitfalls:

• Incomplete Documentation: Ensure that every piece of new evidence supports your case.
• Missed Deadlines: Track all important timelines carefully.
• Ignoring IRS Guidelines: Follow the IRS published guidelines closely, as any discrepancies may delay the process.

When to Seek Professional Help

While you may pursue audit reconsideration independently, enlisting professional help can significantly enhance your chances of a favorable outcome. At Calculus Tax, our experienced team of CPAs understands the intricacies of tax regulations in Burbank and Los Angeles. We can analyze your case and guide you through the entire process, ensuring that you don’t overlook essential details.

Finalizing Your Request

Once you’ve submitted your reconsideration request:

• Be patient while waiting for a response.
• Keep records of all communication with the IRS and any additional submissions.
• Whether you receive a favorable outcome or not, consider revisiting your tax strategy moving forward to avoid audit-related issues in the future. Review your financial reporting practices and stay updated on any changes in regulations.

Conclusion

Navigating the IRS audit reconsideration process can seem daunting, but breaking it down into actionable steps makes it manageable. For taxpayers in Burbank and surrounding areas like Glendale and North Hollywood, understanding the local context and associated tax regulations is crucial. Don't hesitate to reach out to professionals when you need guidance or support through this process.

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FAQs about IRS Audit Reconsideration

1. How long does the audit reconsideration process take?

The process typically takes up to 30 days for the IRS to review and respond, but the timeline can vary based on case complexity and IRS workload.

2. Can I request an audit reconsideration for any audit?

Yes, you can request reconsideration if you have new facts or evidence presented after the initial audit that disputes the IRS's findings.

3. What should I do if my audit reconsideration is denied?

If your request is denied, you still have options, such as filing a formal tax court petition or seeking mediation through the IRS Office of Appeals.

4. Are there fees associated with audit reconsideration?

The IRS does not charge a fee for the reconsideration process itself, but you might incur costs for professional assistance.

5. How do California state tax audits differ from IRS audits?

California state tax audits follow their own guidelines, administered by the Franchise Tax Board. The process can be similar, but the evidence and forms may differ.

6. Should I engage a CPA for audit reconsideration?

Hiring a CPA, especially one familiar with California tax laws, can significantly bolster your case and ensure that all necessary details are thoroughly addressed.

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Estimated Read Time: 7 minutes