What triggers an IRS correspondence audit — and how should you prepare?

An IRS correspondence audit (also called a mail audit) is one of the most common ways the IRS follows up on potential problems in tax returns. Unlike an office or field audit, a correspondence audit is handled primarily through letters and document exchanges. That makes it less invasive, but it still requires timely, accurate responses to avoid additional assessments, penalties, or collections action.

Below I explain the most common triggers I’ve seen in practice, the exact documentation the IRS typically requests, and a practical, step-by-step plan to prepare and respond. I’ve represented clients through dozens of correspondence audits; in my experience, organized records and clear explanations resolve the majority of cases without the need for face-to-face meetings.

Sources: IRS guidance on examinations and notices (see IRS Publication 556 and IRS notice pages).

Common triggers: what usually starts a correspondence audit

• Mismatched income reported by third parties: If income reported on your Form W-2, 1099, or other information return doesn’t match the income you reported, the IRS often sends a notice (for example, CP2000 alerts are for underreported income) asking for clarification or corrected returns. (See IRS notices and how they work at IRS.gov.)
• Unusually large or inconsistent deductions: Deductions that are large relative to your income (big charitable gifts, mortgage interest, medical expenses, or home office deductions) can raise flags.
• Missing forms or schedules: If you file a return but forget to attach required forms, or a form filed by a payer wasn’t included on your return, the IRS may request the missing items.
• Math or clerical errors: Simple calculation mistakes or transposed numbers often trigger a mail inquiry.
• Excessive business expenses or losses: Business deductions that fall outside industry norms for similar size businesses may be questioned.
• Credit or refundable credit mismatches: Claims for EITC, refundable education credits, or other credits sometimes trigger additional documentation requests.

These triggers are consistent with IRS processes described in Publication 556 (Examination of Returns, Appeal Rights, and Claims for Refund) and IRS notice guidance.

How correspondence audits start and what the IRS will ask for

• The IRS will mail a formal notice to the taxpayer’s address on file. The notice explains the specific items under review and requests documents or a written explanation. Check the letter date and any response deadline — many letters request a reply within 30 days, but deadlines vary by notice. Always read the exact instructions on your notice.
• Typical documents requested: copies of W-2s or 1099s, bank or brokerage statements, receipts for deductions, cancelled checks, invoices, contracts, mileage logs, or proof of payments. For business-related items, the IRS may request profit and loss statements, bills of sale, or ledgers.
• Most correspondence audits focus on one tax year and a limited set of issues. They are designed to be resolved by mail when taxpayers supply clear, supporting documentation.

Practical, step-by-step preparation checklist (what to do when you receive a notice)

1. Read the letter carefully and note the deadline. Don’t panic — the letter will identify the issue and exactly what records are requested.
2. Don’t call the IRS first (unless the letter asks you to call). Instead, gather the requested records and prepare a short, factual written response that references the notice line item(s).
3. Create a response package:

• Cover letter: Briefly state who you are, the tax year, the notice number from the top of the IRS letter, and a short summary of what you are enclosing. Keep it factual and polite.
• Include copies (never originals) of the documents the IRS requested. Number or label pages and reference the page numbers in your cover letter.
• If a discrepancy exists (for example, the IRS shows a 1099 that you didn’t receive), explain the situation and provide alternative supporting documents if possible (bank deposits, client records, or correspondence showing the payer’s error).

1. Use tracked delivery. Send your response by certified mail with return receipt or by an approved electronic option if the letter permits it. Keep proof of mailing and a complete copy of everything you sent.
2. Allow time for processing. The IRS processes correspondence audits in cycles; your case may take several weeks after receipt to be reviewed and closed.
3. If you need more time, request it in writing before the deadline and explain why. The IRS sometimes grants reasonable extensions.

Documentation: what to keep and for how long

IRS guidance on recordkeeping recommends keeping records that support income, deductions, and credits. In general:

• Keep most tax records for at least 3 years (the typical statute of limitations for most audits).
• Keep records for 7 years if you file a claim for a loss from worthless securities or a bad-debt deduction (see IRS recordkeeping guidance).
• Keep records related to property (basis, purchase and sale information) until the related tax period closes after the property is sold.

When preparing for a correspondence audit, gather the following by topic:

• Income: W-2s, 1099s, pay stubs, brokerage 1099s, K-1s, and statements showing dates and amounts of payments.
• Deductions: Receipts, invoices, canceled checks, bank statements, credit card statements, mileage logs, and statements of purpose for business expenses.
• Credits: Documentation supporting eligibility for credits (tuition statements, childcare provider records, etc.).

(Official IRS recordkeeping guidance: “How long should I keep records?” on IRS.gov.)

If you can’t find requested documents

• Explain the missing documentation in your cover letter and provide any substitute evidence you do have (bank deposits, third-party statements, contemporaneous notes). The IRS accepts reasonable substitute evidence when original receipts are unavailable.
• If a third party (employer, broker, payer) made a reporting error, explain that and attach any correspondence you have with the third party. You may also ask the payer to reissue a corrected Form 1099 or W-2.

If you disagree with the IRS findings

• You can appeal an IRS decision through the IRS Appeals Office. Publication 5 and Publication 556 describe appeal rights and procedures. If your case proceeds to a formal adjustment you disagree with, follow the appeal instructions in the notice and consider professional representation.
• Audit reconsideration is available in certain situations (for example, if you have new information that was not available during the original review). See IRS guidance on Audit Reconsideration.

Working with a tax professional

• You can authorize a tax professional to speak with the IRS on your behalf by submitting Form 2848 (Power of Attorney and Declaration of Representative). This allows your CPA, enrolled agent, or attorney to receive and respond to IRS notices and represent you before the IRS.
• In my practice, having a professional prepare a clean response package, double-check the math, and add a concise explanation often prevents follow-up questions and speeds resolution.

Common mistakes and how to avoid them

• Mistake: Sending originals. Always send copies and keep originals.
• Mistake: Responding late or not at all. A timely response reduces the chance of proposed assessments and penalties.
• Mistake: Providing too little explanation. Supplement documents with a short narrative that ties evidence to the items on your return.
• Mistake: Over-sharing unnecessary personal information. Keep the response focused on the items the IRS asked about.

Example response outline (short template)

• Header: Your name, SSN (last 4 digits), tax year, IRS notice number.
• Paragraph 1: Acknowledge the letter and state you are providing the requested documentation.
• Paragraph 2: List each document enclosed and a one-sentence explanation of how it supports the amount on your return.
• Closing: Request confirmation of receipt and provide contact information for you or your authorized representative.

Real-world vignettes from my practice

• Mismatched 1099: A client received a CP2000-like notice for what appeared to be underreported freelance income. The payer had issued duplicate 1099s. We supplied a corrected invoice schedule and bank deposits; the IRS accepted the explanation and closed the case.
• Home office deduction questioned: Another client’s home office claim was higher than expected for their income bracket. We submitted a floor-plan, square footage calculations, utility bills, and proof of exclusive use. The IRS accepted the documentation.

When a mail audit becomes an in-person audit

If the IRS believes the issues require more extensive verification, a correspondence audit can be escalated to an office audit (in-person at a local IRS office) or field audit (at your home or business). That escalation is less common for routine mismatches but possible when documentation is insufficient.

Useful links and internal resources

• For a step-by-step guide on what to expect and how the IRS communicates during a correspondence audit, see: What to Expect During an IRS Correspondence Audit (https://finhelp.io/glossary/what-to-expect-during-an-irs-correspondence-audit/).
• If your notice is an audit letter and you need a short how-to on replying, see: How to handle an IRS audit letter? (https://finhelp.io/glossary/how-to-handle-an-irs-audit-letter/).
• For a documentation checklist used in more extensive audits, including field audits, see: Preparing for a Field Audit: Documentation Checklist (https://finhelp.io/glossary/preparing-for-a-field-audit-documentation-checklist/).

Final tips — how to reduce the risk of a correspondence audit

• Report income exactly as shown on information returns; don’t omit 1099s or underestimate income.
• Keep clear, contemporaneous records for deductions and credits.
• Use tax software or a tax professional to reduce math and reporting errors.
• Respond quickly and professionally if the IRS contacts you.

Professional disclaimer: This article is educational and does not substitute for individualized tax advice. Consult a CPA, enrolled agent, or tax attorney for guidance tailored to your circumstances.

Author credentials: I’ve worked in tax and financial planning for over 15 years and have represented clients in correspondence and office audits; these recommendations reflect practical steps I regularly use in client representation.

Authoritative sources: IRS Publication 556; IRS guidance on notices and letters; IRS recordkeeping guidance (IRS.gov).