Surviving IRS Audits
IRS Representation Makes Everything Smoother
Few things strike fear in the hearts of taxpayers than the idea of IRS Audits, but with proper representation, they don’t have to be terrifying. Nobody would want an IRS Audit, but they don’t have to destroy you, your business, or your finances. You can learn the IRS’s perspective on the process from the IRS Website Page on IRS Audits.
Three Types of IRS Audits
Types of Audits Matter
The IRS divides it’s audits into categories, and the most common type isn’t really that scary. Indeed, when you think of an audit, you think of an intrusive process where the IRS combs through your business. However, the reality is more varied. The three types of audits are the following:
- Correspondence Audit
- Field Audits
- Office Audits
Each type of audit has its quirks and rules, but with proper representation you should be able to get through the process relatively unscathed. You will need to have your documentation in order, but you will not have your life turned upside down.
Correspondence Audit
A Basic Mail Audit
Fortunately the most common is the correspondence audit, and it’s straightforward with experienced IRS Representation. Within the accounting and tax world, the correspondence audit is called a “letter audit” or a “mail audit.” Essentially the IRS has some questions, and asks you to mail it in. Most of our Tax Clients choose Audit Protection with their tax return, which covers up to 5 hours of audit work. Since most audits are of the correspondence audit process – especially the IRS CP2000 Notice, these hours cover our research and response time, so you just send us a photo of the letters on your phone and we handle everything.
Field Audits
When the Taxman Shows Up
Field offices are the type of audit that strikes fear in people. In a field audit, the IRS agent will come to your business or home to look at your records. A Field Audit is particularly perilous, because they may try to find out about things while your guard is down because they are in your home or office. These audits are the most terrifying, and while we will help you prepare for them, we will usually at least coordinate with legal counsel to help contain them.
Office Audits
Going to the IRS Building
Office Audits are the second most common, and relatively manageable. In an Office Audit, you have scheduled meetings with an IRS Agent and their office. Each meeting you will bring the requested documentation, and the process of reviewing will continue. With our IRS Representation Clients, we help them prepare for the meeting, and usually attend the meeting with them to help make sure nothing unsuspected happens. Office Audits can usually be dispatched with quickly with proper planning.
Surviving the IRS Audit Process
We’ll get through this together
The secret to surviving the IRS Audit Process is keeping a cool head, and managing the process well. The IRS Agents do this all day, so they know how to rattle a taxpayer. You need to rely on solid documentation, a plan to give the IRS only the information that they are entitled to, and an understanding that you aren’t a push over for them. With the right strategy and representation, you will get through your IRS Audits.
IRS Audits FAQs
What is an IRS audit and why was I selected?
An IRS audit reviews your return to verify income, deductions, and credits. Returns are selected by computer scoring, document mismatches (W-2/1099/1099-K), related examinations, or random selection.
What are the types of IRS audits?
Three types: Correspondence audits by mail, Office audits at an IRS office, and Field audits at your business or home. Most audits start as correspondence and can be resolved with documents.
Is a CP2000 notice the same as an audit?
A CP2000 is an underreporter notice, not a full audit, but it requires a timely, documented response. If ignored, it can escalate to assessment or a broader audit.
How long do I have to respond to an IRS audit letter?
Most letters provide about 30 days. You can often request more time, but interest accrues on any additional tax, so respond promptly.
What documents will the IRS ask for in an audit?
Expect bank statements, receipts, invoices, mileage logs, payroll and 1099 records, depreciation schedules, and proof for credits/deductions. Auditors may issue Form 4564 (IDR) listing specific items.
Should I meet the IRS agent alone?
It’s best to have representation. With Form 2848 Power of Attorney, your CPA can speak to the IRS, organize records, and control the scope of questions.
What are my rights during an IRS audit?
You have the right to professional treatment, to know why the IRS is asking for information, to representation, to appeal, and to finality. You must provide only documents relevant to the issues examined.
How far back can the IRS audit?
Generally 3 years from the filing date. It can extend to 6 years for substantial understatements of income. There is no limit for fraud or non-filed returns.
Will an IRS audit trigger criminal charges?
Most audits are civil. Criminal referrals are rare and typically involve willful evasion, false returns, or fraud indicators. Proper representation reduces risk.
What if I disagree with the audit findings?
You can request a meeting with the supervisor, file a written protest for IRS Appeals, or petition U.S. Tax Court after receiving a Notice of Deficiency. Deadlines are strict—don’t miss them.
Can I set up a payment plan if I owe after an audit?
Yes. Options include short-term payment plans, installment agreements, and in limited cases an Offer in Compromise. Penalty relief (first-time abatement or reasonable cause) may apply.
What are common red flags that trigger audits?
Large cash businesses, mismatched 1099/1099-K income, excessive deductions, auto and travel without logs, hobby losses, and high Schedule C losses relative to income.
How should I prepare for a field or office audit?
Organize records by issue and date, reconcile totals to your return, label documents, and provide only what’s requested. We attend with you and manage submissions to stay on scope.
What happens after the audit is completed?
Outcomes include no change, agreed change (you sign and pay/plan), or unagreed (you receive a Notice of Deficiency and can appeal). We handle closing, payment options, and any state follow-on filings.
Does an audit affect my state taxes?
Often yes. States may require you to report federal changes. We coordinate state amendments or explanations to keep you compliant.
How can I reduce my chances of future audits?
Keep contemporaneous records, match 1099/1099-K totals, maintain mileage and accountable plans, issue proper 1099s, separate business and personal spending, and file accurate, timely returns with support.