Audit Reconsideration

[littleman]

I have a client who prepared his taxes in 2001 and was subsequently audited. Some of his business deductions were disallowed since he could not provide receipts to verify the expenses. The audit resulted in a tax liability the client must now pay.

He has now found some of the receipts to verify the expenses. Additionally, he wants to add business mileage as well as take deductions for business use of home. These items were not even listed on the original return and were never addressed during the audit.

When sending information for an audit reconsideration, can the tax preparer include additional deductions that were never addressed during the audit? Or does the tax preparer need to file the audit reconsideration, wait for a ruling/decision, and then amend the return based on the findings?

Thanks!

[Bees Knees]

You have a problem with 2001 considering the statute of limitations has run for claiming additional deductions. Your only hope is that the statute of limitations was waived due to the audit. Even if it was, I believe they only waive it for specific items being questioned on the return. If that is the case, the IRS cannot open up any new items for consideration and neither can the taxpayer.

If the statute of limitations were not an issue, then yes, you could add the additional deductions to your audit reconsideration.

[Jiggers]

Audit Reconsideration

You can file an amended return anytime, even after the statute of limitations has run. However, you cannot get a refund if the amended return shows that one is due.

[ED SMITH]

Audit reconsideration - refund

I recently had a client who had been denied his claim of dependent for 3 of his kids for 1999,2000,2001. All 3 yrs had been closed. Both he and his wife were legal residents from Guatamala and 2 of the 3 kids were born in the US, yet the IRS denied them dependent status.. The IRS assessed him for those 3 yrs and later yr refunds were offset.

I filed for audit consideration providing the IRS with documentation including birth certificates and school records as well as a statements from the schools and a rental agent, which established that the parents and kids all lived in the same place.

For some reason 1999 went to a center in NY and the other to to Fresno. Last month the client called to tell me he had received a check for over $6900 dollars (including interest) which was the correct amount.

For the businessman, if for some reason the year is not closed and the mileage and OIH offset the assessed taxes a 1040X alone should do the job. However, if the year is closed and the offset is not enough, then you would have to do an audit recon.

ED

[Unregistered]

Remember that a refund of tax is possible the later of the 3 years from filing or 2 years from payment.

[Mark Goldberg]

SOL has not run

The previous respondent is correct, I believe. As the IRS just assessed additional tax and it has not been paid or if it has been paid it was paid less than 2 years ago the 2001 return is still open.

[Richard]

But limited....

But the additional refund will be limited to the amount of additional tax paid. I do not know how it would work if the additional tax were assessed but not yet paid.