Audit response

### Audit Rates by Income Level The IRS audits a relatively small percentage of returns overall, but rates vary dramatically by income:

65 steps across 12 sections

1. Receive and Read the Notice Carefully

  • The IRS always initiates audits by mail — never by phone, email, or text message
  • Identify the type of notice (CP2000, Letter 566, Letter 525, etc.)
  • Note the specific tax year(s) being examined
  • Identify exactly which items the IRS is questioning
  • Note the response deadline (typically 30 days from the letter date)
  • Note the examiner's name and contact information

2. Verify the Notice Is Legitimate

  • Check that the notice references your correct SSN/EIN
  • Verify through IRS.gov or by calling the IRS directly (use the number on IRS.gov, not the letter)
  • Scammers frequently impersonate the IRS — legitimate IRS notices come by mail with specific case/notice numbers

3. Decide Whether You Need Professional Help

  • For simple correspondence audits on clear issues, self-representation may be fine
  • For office or field audits, strongly consider hiring a CPA, Enrolled Agent (EA), or tax attorney
  • You have the right to representation at any stage (see Rights section below)

4. Gather and Organize Documentation

  • Pull together only what is specifically requested in the audit notice
  • Common documents needed:
  • Tax return for the year in question (and supporting schedules)
  • W-2s, 1099s, K-1s, and other income documents
  • Receipts for claimed deductions (business expenses, charitable donations, medical expenses)
  • Bank and credit card statements
  • Mileage logs (if claiming vehicle deductions)
  • Home office measurements and calculations
  • Mortgage interest statements (Form 1098)
  • Property tax records

5. Draft Your Response

  • Address each item the IRS questions individually
  • For each item, provide:
  • A brief, factual explanation
  • Supporting documentation (copies only, never originals)
  • References to the relevant tax code or regulation if applicable
  • Include a cover letter summarizing your response and listing all enclosed documents
  • Be clear, concise, and factual — avoid emotional language or lengthy narratives

6. Submit Your Response

  • Send copies only — never send original documents
  • Use certified mail with return receipt requested (USPS Form 3811)
  • Keep a complete copy of everything you submit
  • Submit before the deadline — if you need more time, request an extension in writing before the deadline expires
  • For office/field audits, bring organized binders to the appointment

7. Follow Up

  • If you don't hear back within 45-60 days for correspondence audits, follow up with the examiner
  • Keep records of all communications (dates, names, reference numbers)
  • For in-person audits, take notes during the examination

8. Review the Examination Report

  • After the audit concludes, you'll receive a Revenue Agent's Report (RAR) or examination report
  • Review it carefully for accuracy
  • You have 30 days to respond (agree or disagree)

9. 1. Correspondence Audit (Mail Audit)

  • Most common type — approximately 77% of all audits
  • Conducted entirely by mail
  • Typically focused on one or two specific issues (e.g., a single deduction, a missing form)
  • You receive a letter (often CP2000, CP75, or Letter 566) identifying the issue and requesting documentation
  • Response deadline: Usually 30 days from the date on the letter
  • Typical duration: A few weeks to a few months
  • Common triggers: Mismatched income (W-2/1099 vs. return), EITC claims, specific deduction verification

10. 2. Office Audit (Office Examination)

  • Second most common — approximately 22% of audits
  • Conducted in person at an IRS office
  • Broader in scope than correspondence audits, covering multiple items on the return
  • You receive a notice scheduling an appointment and listing documents to bring
  • You (or your representative) must appear in person with all requested records
  • Typical duration: Several months
  • Common triggers: Multiple deduction categories questioned, small business income issues

11. 3. Field Audit (Field Examination)

  • Most comprehensive and serious type — approximately 1% of audits
  • An IRS Revenue Agent visits your home, business, or representative's office
  • Covers a broad review of financial records, business operations, and lifestyle
  • May include physical inspection of business premises
  • Often targets businesses, high-income individuals, and complex returns
  • Typical duration: Several months to over a year for complex cases
  • Common triggers: Large business operations, significant unreported income suspicions, complex entity structures

12. Important: Audit Escalation

  • You respond poorly or incompletely
  • You respond late
  • Your response raises more questions than it answers
  • The examiner discovers issues beyond the original scope

Common Mistakes

  • Ignoring the audit notice
  • Missing deadlines
  • Volunteering excess information
  • Providing original documents
  • Being hostile or argumentative

Pro Tips

  • Review your return thoroughly
  • Pull all supporting documents
  • Consider hiring representation
  • Research similar cases
  • Answer only what is asked

Sources

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