Guides

How To Respond to an IRS Audit

The IRS is auditing your return. Here's what to expect, what your rights are, and what to do at every step.

Liam Williams

Liam Williams

— 11 min read

You opened a letter from the IRS and it says your tax return has been selected for examination. Maybe it's Letter 566 asking for documents by mail. Maybe it's Letter 2205 telling you a revenue agent wants to meet. Either way, the word "audit" is in the letter and your stomach just dropped.

An audit is not a verdict—it's a review. It's also not a criminal investigation. A civil examination is handled by examiners or revenue agents, not IRS Criminal Investigation. The IRS is asking you to support what you claimed on your return. How you respond makes a real difference in the outcome.

Most audits can be resolved without ever going to Tax Court. This guide walks through the process from the moment you receive the audit notice through the final examination report—and what to do at every step.

Three Types of IRS Audits

Not all audits work the same way. The IRS conducts three types of examinations, and the type you're facing determines what to expect and how to prepare.

Correspondence Audit

This is the most common type of IRS audit. It's conducted entirely by mail. You receive Letter 566, which identifies specific items under review—a particular deduction, credit, or income item—and requests documents to support what you claimed.

Correspondence audits are handled by tax examiners at IRS campus offices, not revenue agents. They tend to focus on a single issue or a small number of issues. Your deadline to respond is typically 30 days from the letter date, though some variants allow 45 days. The exact deadline is stated on your letter.

Office Audit

An office audit requires you to bring your records to a local IRS office for an in-person review. The IRS schedules an appointment in advance, and the examination typically covers multiple items on your return.

Office audits are less common than correspondence audits but more involved. You can request that the examination take place at your representative's office instead.

Field Audit

This is the most intensive type of examination. A revenue agent contacts you—usually by Letter 2205—to schedule a visit to your home, place of business, or your representative's office. The IRS allows 14 calendar days from mailing before following up by phone.

Field audits are conducted by revenue agents, who are generally more experienced than the tax examiners handling correspondence cases. These examinations can cover multiple issues across your entire return.

A note on CP2000 notices: A CP2000 is not technically an audit. It's an automated notice generated when the income documents the IRS received (W-2s, 1099s) don't match what you reported on your return. The response process is different from a formal examination.

Your Rights During an Audit

Before you respond to anything, know what you're entitled to. The Taxpayer Bill of Rights, codified in IRC § 7803(a)(3) and summarized in Publication 1, establishes ten fundamental rights. Several are directly relevant during an audit.

Right to representation. You can have an attorney, CPA, enrolled agent, or other authorized representative handle the audit on your behalf. File Form 2848, Power of Attorney, and your representative can attend meetings without you—unless the IRS issues an administrative summons (IRC § 7521(c)).

Right to suspend an interview. During any in-person interview, you can stop and consult with a representative before continuing (IRC § 7521(b)(2)). You don't have to answer questions on the spot.

Right to record. You can audio-record any in-person interview under IRC § 7521(a). Publication 556 requires 10 days' advance written notice to the examiner, and you must bring your own recording equipment. The IRS can also record—it must give you the same notice before the interview begins.

Right to know why you were selected. The IRS must explain the audit process and your rights at the initial meeting (IRC § 7521(b)(1)).

Protection against unnecessary examination. Under IRC § 7605(b), you cannot be subjected to unnecessary examinations. Generally, the IRS is limited to one inspection of your books per taxable year. If the same items were examined in two prior years with no change, contact the IRS—Publication 1 confirms the IRS tries to avoid repeat examinations.

Right to request a different location. You can request that the examination take place at a reasonable time and convenient location, including your representative's office.

If you can't afford a representative, a Low Income Taxpayer Clinic can provide free help during the audit if your income is below 250% of the poverty line and the amount in dispute is $50,000 or less.

How To Respond to the Initial Notice

The first thing to do is read the letter carefully. Identify the letter number (Letter 566, Letter 2205, or something else), the specific items under review, and the response deadline.

Note the deadline. For correspondence audits, the deadline is typically 30 days from the letter date, though some variants allow 45 days. The exact date is on your letter. For field audits, Letter 2205 provides a date to respond. Mark the deadline on your calendar.

Request an extension if you need one. If you can't gather everything by the deadline, contact the IRS office listed on the letter before the deadline expires. The IRS typically grants extensions of 30 days for mail audits. Put your extension request in writing.

Gather only what is requested. Don't send your entire filing cabinet. The letter identifies specific items—send documentation for those items and nothing else. Volunteering extra information can open new issues that weren't part of the original audit.

Send copies, never originals. The IRS can lose documents. Keep your originals and send photocopies.

Send by certified mail. This creates a dated record that you responded. If there's ever a question about whether you met the deadline, the certified mail receipt is your proof.

Respond even if you don't have everything. A partial response with an explanation is far better than no response at all. Explain what you're still gathering and when you expect to have it. Silence is the worst option—it tells the IRS to proceed without your input.

What Documentation To Gather

Start with a copy of the tax return itself. If you don't have one, your tax return transcript shows the information as filed. Your account transcript shows what the IRS has assessed and can help you understand what they're looking at.

The specific documents you need depend on what's being examined. Here are the most commonly audited areas:

Income. W-2s, 1099s, K-1s, bank statements, and broker statements. If the IRS thinks you underreported income, you need to identify every deposit they're questioning and show where the money came from.

Business expenses (IRC § 162). Receipts, invoices, cancelled checks, and credit card statements showing the vendor and amount. You need to show the expense was paid, the amount, and the business purpose.

Travel, meals, and vehicle use (IRC § 274(d)). These require strict substantiation—a contemporaneous log showing the amount, date and place, business purpose, and business relationship. Receipts are required for lodging and any single expense over $75. Without a contemporaneous log, the IRS disallows the entire deduction, not just the unsubstantiated portion.

Charitable contributions (IRC § 170). Documentation requirements escalate with the amount: bank records or receipts for contributions under $250; a contemporaneous written acknowledgment from the organization for contributions of $250 or more; a qualified appraisal for noncash contributions over $5,000.

Home office (IRC § 280A). Floor plan or measurements showing the space used exclusively and regularly for business, the total square footage of your home, and your calculation of the business-use percentage.

Earned Income Tax Credit. Proof of income, filing status, qualifying children (relationship, residency, age), and other eligibility factors.

Organize your documents by category—matching each group to the specific item the IRS is reviewing. For a deeper look at substantiation requirements, see How To Prepare Your Evidence for Tax Court.

What Happens During the Examination

The examination process depends on the type of audit.

In a correspondence audit, you mail your documents to the IRS. The tax examiner reviews them and either closes the case with no changes, proposes adjustments, or requests additional information. The back-and-forth happens entirely by mail.

In an office or field audit, the process is more interactive. The examiner reviews your records, asks questions, and may issue Information Document Requests (IDRs)—formal written requests for specific documents or information. Respond to each IDR promptly and completely.

During a longer examination, the IRS may ask you to sign Form 872—a consent to extend the statute of limitations for assessment. Signing gives both sides more time to work the case. You are not required to sign, but refusing may cause the IRS to issue a Notice of Deficiency sooner to protect its assessment deadline.

Throughout the examination, the examiner is looking for one thing: whether you can substantiate what you claimed on your return. They compare your records against what the tax code requires for each type of deduction, credit, or income item.

When the examiner finishes the review, there are three possible outcomes:

  • No change. The IRS accepts your return as filed. You receive a letter confirming no adjustments.
  • Agreed. The examiner proposes changes, you review them, and you agree. You sign Form 870—a waiver of restrictions on assessment—and the case closes.
  • Unagreed. You disagree with some or all of the proposed changes. The examiner prepares a formal examination report and the case moves to the next stage.

The 30-Day Letter and Examination Report

If you and the examiner can't agree, the IRS sends you a package commonly called the "30-day letter." For mail audits, this is most commonly Letter 525; for in-person audits, it's typically Letter 915.

The package includes:

  • The cover letter explaining your right to appeal within 30 days
  • Form 4549 (Income Tax Examination Changes)—the numerical summary showing each adjustment to your income, deductions, and tax
  • Form 886-A (Explanation of Items)—the examiner's detailed narrative explaining the legal basis and facts behind each proposed change
  • Form 870—a waiver you can sign if you agree with the changes
  • Publication 5—a summary of your appeal rights

How to read the report. Start with Form 886-A. For each disputed item, the examiner lays out the IRS's position—the legal authority, the facts examined, and the reason for the adjustment. This tells you exactly what the IRS thinks you got wrong and why. Form 4549 shows the bottom line: how the adjustments change your taxable income, your tax, and any penalties.

The 30-day deadline is administrative, not statutory. Unlike the 90 days deadline on a Notice of Deficiency—which is set by IRC § 6213(a) and cannot be extended—the 30-day window comes from IRS administrative practice. Publication 556 says you "generally" have 30 days. If you need more time, contact the IRS office that issued the letter before the 30 days expire.

Any additional tax from the audit will also include interest running from the original due date of the return. Interest is not negotiable—it accrues automatically and cannot be abated in most circumstances.

The examination report may also include an accuracy-related penalty under IRC § 6662—20% of the underpayment. If penalties are proposed, see How To Request IRS Penalty Abatement for defenses and abatement strategies.

If You Disagree: Your Options

You don't have to accept the examiner's findings. Here are your options, roughly in order of escalation.

Respond to the examiner. If you have additional documentation or a written explanation that addresses the examiner's concerns, submit it with a response to the 30-day letter. Sometimes the examiner reconsiders.

Request a manager conference. You can ask to meet with the examiner's supervisor to explain your position. Publication 556 and Publication 3498 both confirm this right.

Request IRS Appeals. The IRS Independent Office of Appeals provides a free, independent review of your case by someone who had no involvement in your audit. If the total proposed tax and penalties are $25,000 or less per tax period, complete Form 12203, Request for Appeals Review. If the total is over $25,000, a formal written protest is required. Appeals evaluates your case based on what the IRS would likely achieve at trial—and has authority to settle. See What To Expect at Your IRS Appeals Conference for how to prepare and negotiate.

Request Fast Track Settlement. Form 14017 lets you apply for Fast Track Settlement during or after the examination but before the case goes to Appeals. Both you and the examiner must agree to participate. A trained Appeals employee acts as mediator, with a goal of resolution within 60 days. You keep all your appeal rights if the process doesn't work out.

Wait for the Notice of Deficiency. If you do nothing after the 30-day letter—or if Appeals doesn't resolve your case—the IRS issues a Notice of Deficiency, commonly called the 90-day letter. From the date on that notice, you have 90 days (150 days if you're outside the United States) to file a petition with the U.S. Tax Court. The filing fee is $60. Filing a petition does not mean going to trial—most (76%) of Tax Court cases settle before trial.

If You Don't Respond

Ignoring the audit does not make it go away. It makes it worse.

If you don't respond to the initial audit notice, the IRS makes its determination based on the information it already has—which almost always means the maximum adjustment. Every questioned item is disallowed. Every proposed change stands.

The IRS then sends the 30-day letter with the examination report. If you don't respond to that either, the IRS issues a Notice of Deficiency. That starts the 90 days clock to petition Tax Court.

If you miss the 90 days deadline on the Notice of Deficiency, the IRS assesses the tax automatically and your right to challenge it in Tax Court—the only court where you can dispute the amount without paying first—is gone. At that point, your options narrow significantly. See You Missed the 90-Day Deadline. Now What? for what remains available, and How To Resolve Your IRS Tax Debt for payment options if you owe more than you can pay.

Common Mistakes

Not responding at all. This is the single most damaging mistake. The IRS proceeds without your input, and the result is almost always worse than if you had participated—even with incomplete records.

Missing the 30-day window. The 30-day letter is your last administrative opportunity to resolve the case before the IRS issues a Notice of Deficiency. Missing it closes the door to Appeals for that examination cycle.

Not keeping records. The time to organize your records is when you file the return, not when the IRS asks for them. But even now, banks and credit card companies can often provide duplicate statements, and organizations can reissue charitable acknowledgment letters.

Sending everything you have. Respond to what the IRS asked for. Sending boxes of unsorted papers slows the process and can raise new questions about items that weren't originally under review.

Being combative or emotional. The examiner is doing a job. Hostility doesn't help your case and can make the process harder. Be factual, organized, and responsive.

Not seeking representation. You don't have to face an audit alone. If you can't afford a tax professional, a Low Income Taxpayer Clinic can represent you at no cost if you qualify.

Signing Form 870 without understanding it. Form 870 waives the restrictions on assessment under IRC § 6213(a). Once you sign it, the IRS can assess the tax immediately. You give up the right to receive a Notice of Deficiency and petition Tax Court on the agreed issues. You can still file a refund claim later—but that requires paying the full amount first. Read the form carefully before signing.

Resources

IRS Publications and Forms

IRC Sections

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax professional or attorney.

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