Three audit types
Correspondence audits happen entirely by mail. Office audits require you to visit an IRS office with documentation. Field audits happen at your home or business. Most taxpayers never see anything beyond correspondence. The type is stated on the first notice, along with the tax year under exam and the specific items in question.
The first notice and what it asks
The opening letter identifies the year, the line items being examined, the documents requested, and a response deadline. Read it twice before doing anything. The scope matters: an exam opened on charitable contributions is not an invitation to explain your whole return. Respond to what is asked, on time, and keep a copy of everything you send. Certified mail or the IRS document upload tool creates the proof-of-response trail you may need later.
Representation rights
You can be represented by a CPA, attorney, or Enrolled Agent at any stage. Form 2848 gives the rep authority to speak for you. Most clients never talk to the IRS directly after engaging representation. That separation is worth more than it sounds: examiners ask open-ended questions precisely because casual answers expand the audit, and a representative answers only the question on the table.
Preparing documentation
Organize records by issue, not in a shoebox: one packet per examined item, with a one-page summary tying the documents to the return line. Missing records can usually be reconstructed from bank statements, card statements, vendor duplicates, and third-party confirmations; reconstructed records are acceptable when they are credible and consistent. Never send originals.
What not to do
The mistakes that turn small audits into large ones:
- Ignoring the notice; deadlines pass and the IRS assesses without you
- Volunteering documents or years that were not requested
- Guessing at answers instead of saying you will check and respond
- Handing over unrestricted bank account access when a targeted statement would do
- Missing the 30-day or 90-day response windows on the closing letters
Timeline
Correspondence audits typically close in 3-6 months. Office audits 6-12 months. Field audits 6-18 months or longer. The agency has three years from filing date to initiate an audit (longer for substantial understatements). Delays on the IRS side are common; delays on your side are what generate penalty exposure, so hitting each response date matters more than pushing the overall pace.
Possible outcomes
No change (you win), agreed adjustment (you pay), disagreed adjustment (you protest to Appeals or Tax Court), or partial agreement. Most disagreements resolve at Appeals without litigation. An agreed balance can usually go onto an installment agreement immediately, so an adverse result is a payment plan conversation, not a crisis.
Appeal rights after the exam
A disagreed exam produces a 30-day letter, which is your window to file a written protest with the IRS Independent Office of Appeals. If that window passes, a Notice of Deficiency (the 90-day letter) follows, and petitioning Tax Court within 90 days preserves your right to contest the tax before paying it. Appeals officers settle based on hazards of litigation, which is why well-documented positions do better there than at the exam level.
Common questions
- What are the odds of being audited?
- Overall audit rate is under 1%. Higher income (over $1M AGI) sees 2 to 3%+. EITC filings and high Schedule C deductions see elevated rates.
- Can I represent myself?
- Yes, but in correspondence audits self-representation often costs more than it saves in professional fees. We see situations where taxpayers said the wrong thing and turned a $2,000 dispute into $20,000.
- Will the audit expand to other years?
- It can, if the examiner finds the same issue repeating. Exams usually open on a single year, and a clean, well-documented response is the best way to keep it that way.
- What actually triggers audits?
- Mismatches between your return and third-party forms (W-2s, 1099s), deductions far out of line with income, cash-heavy businesses, and refundable credit claims. Random selection exists but is a small share.
- Do I have to meet the auditor in person?
- In a correspondence audit, no one meets anyone. In office and field audits, a representative with a Form 2848 can appear for you, and in most cases you never attend.
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