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Challenging an Assessment After the IRS or the Minnesota Department of Revenue (MDR) Completes an Audit of Your Return and Starts Collection Actions Against You.

Posted by Tom Regan | Sep 10, 2022 | 0Comments

When it is too late to file a corrected tax return and you think the IRS or MDR assessment is wrong, you may still be able to challenge the assessment without going to court. For the IRS, the procedure is known as an Audit Reconsideration Request (AR). The IRS has the discretionary authority to abate an assessment of any tax if it determines that the tax assessed is more than you owe. 

Reasons for an AR include you did not appear for the audit, you moved and did not receive the correspondence from the IRS, or, you have new documentation to present. 

To be eligible for an AR you must have filed a tax return, the assessment must be unpaid (if you paid the tax you need to file a formal claim for refund), you must know which adjustments you are disputing, and you must provide additional information not considered during the original examination. For more information on the process and requirements, see IRS Publication 3598.

If the State of Minnesota assessed you based upon an assessment by the IRS, and that IRS assessment is changed through an AR, the State of Minnesota should change its assessment to correspond with the IRS assessment.

Many times, however, the tax obligation just involves the state and there is no AR. 
The State of Minnesota has similar authority to abate taxes after an assessment. The state program is called a Courtesy Review (CR). A CR is a request for review of an assessment after the appeal period has expired. The state will consider only new information that has not been previously reviewed. The CR is effective when the taxpayer never took advantage of the audit or appeal to present information and the state's assessment is clearly wrong. When the taxpayer requests the review, the state sends the taxpayer an application for a courtesy review.  The taxpayer should follow the instructions from the state and present the best argument possible, as there is no appeal from a denial of the CR. 

For information on the Minnesota Courtesy Review, ask the Minnesota Department of Revenue (MDR) representative who contacts you and explain that you have additional information that was never considered by the MDR. He or she will send you the application for a courtesy review. 


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