Overview

An IRS correspondence audit is the most common and least invasive type of IRS examination. Instead of an in-person meeting, the IRS sends a letter (a notice) asking you to verify one or more items on your filed return — for example, unreported income, a deduction, or a credit. These audits focus on narrow issues and are resolved by mail when you supply the requested documentation and explanation.

In my practice working with individuals and small businesses, a majority of correspondence audits are settled with a single written response when taxpayers provide organized, legible records and a concise explanation. The key advantage of a correspondence audit is that it usually requires paperwork rather than travel or meetings. The downside is strict deadlines and the risk of additional adjustments if the response is incomplete.

Authoritative guidance: see IRS Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund (IRS Publication 556) for a formal description of examination rights and procedures (https://www.irs.gov/pub/irs-pdf/p556.pdf).

How a correspondence audit typically works

  1. You receive a notice in the mail. The notice will:
  • Identify the tax year under review and the specific line-item(s) in question.
  • List documents the IRS wants (often examples such as receipts, statements, or contracts).
  • Provide a response deadline and return instructions.

  1. Read the notice carefully. Identify the tax year, the items questioned, the documents requested, and the deadline. Deadlines can vary — some letters give 30 days; others may allow 60 days. Always follow the specific instructions in your notice.

  2. Gather and organize supporting records. Typical evidence the IRS accepts includes W-2s and 1099s, bank and credit card statements, invoices, receipts, canceled checks, contracts, and contemporaneous logs (mileage, home-office use, etc.). If you claim tax deductions, be ready to show business purpose, dates, amounts, and how you calculated the deduction.

  3. Prepare a concise cover letter. Your response should include:

  • A copy of the IRS notice (or reference number and date) on every page you send.
  • A short, factual explanation for each item under review.
  • A numbered list or table that maps your supporting documents to the IRS’s questions (e.g., Item A: receipts 1–12; Item B: Form 1099-MISC copy).

  1. Send the response using a trackable method. Use certified mail with return receipt, or a delivery service that provides tracking and proof of delivery. Retain full copies of everything you send.

  2. Wait for IRS acknowledgment. The IRS will either accept your documentation and close the matter, propose an adjustment, or ask follow-up questions. If it proposes an adjustment, it will send a revised tax calculation and explain appeal rights (see Publication 556).

Document checklist — what the IRS commonly asks for

  • Copies of Forms W-2 and 1099 (all types) for the year in question.
  • Bank statements and canceled checks supporting deposits and withdrawals.
  • Receipts and invoices for expenses and deductions (itemized and dated).
  • Contracts, invoices, and client correspondence for business income.
  • Mileage logs or a contemporaneous diary for vehicle and home-office deductions.
  • Proof of payment for charitable contributions (organization name, date, amount, and receipt).
  • Lease agreements, rental receipts, and property records for rental income claims.

Tip from practice: if documents are voluminous, include a simple index and label pages to match the IRS’s item list. This saves time for both you and the examiner and reduces back-and-forth requests.

Common triggers for a correspondence audit

  • Discrepancies between third-party forms (1099, W-2) and what you reported.
  • Unusually large deductions relative to reported income (e.g., home-office, large charitable giving).
  • Missing income reported by payers (e.g., a 1099 not included on your return).
  • Math errors or incorrect credits claimed.

For more on selection triggers, see the FinHelp article: How the IRS Determines Audit Selection: Algorithms and Triggers (https://finhelp.io/glossary/how-the-irs-determines-audit-selection-algorithms-and-triggers/).

How to write an effective response

  • Be direct and factual. Avoid long narratives. Answer each question the IRS raises.
  • Organize supporting documents so each item the IRS questions is easy to verify.
  • Use numbered attachments and reference them in your cover letter.
  • Avoid volunteering additional information beyond what the notice asks for — unnecessary details can create new questions.
  • Keep the tone professional and courteous.

Practical example from my work: I once helped a client who received a correspondence audit for a $12,000 Schedule C deduction for travel. We provided a compact packet with the client’s trip itinerary, invoices, credit-card statements showing payments, and a two-paragraph explanation mapping the receipts to business activities. The case closed with no penalties because the documentation matched the claim and showed a business purpose.

When you can’t provide the exact documents

  • Explain why the original documents are unavailable (e.g., older records destroyed per a routine retention schedule) and provide reasonable substitutes: bank statements, duplicate invoices, insurance claims, ledger entries, or a signed affidavit explaining the circumstances.
  • If you forgot to report third-party income, frankly explain it, supply the missing income documentation, and be prepared to pay any tax due. If you can’t pay immediately, the IRS offers payment plans — but respond first and resolve the record issue.

If you need help assembling an alternative record or drafting a reasonable cause statement, consult a tax professional.

When to hire a representative and use Form 2848

If the notice raises complex issues, large proposed tax changes, or if you prefer a professional handle communications, hire a CPA, enrolled agent, or tax attorney. To authorize a representative, use IRS Form 2848 (Power of Attorney). For more on representation, see the FinHelp article: Using a Power of Attorney (Form 2848) During an Audit or Appeal (https://finhelp.io/glossary/using-a-power-of-attorney-form-2848-during-an-audit-or-appeal/).

Representation is especially helpful when a correspondence audit escalates to an office or field audit, or if the IRS proposes penalties. A qualified representative can communicate with the IRS on your behalf and file appeals when needed.

If the IRS proposes an adjustment or you disagree

Practical tips to reduce correspondence audit risks in the future

  • Keep clean, contemporaneous records and a simple indexing system.
  • Reconcile 1099s, W-2s, and bank records before filing.
  • Avoid large, unexplained deductions relative to your income.
  • Maintain digital backups of key documents for at least three to seven years depending on the matter.

Frequently asked questions (short answers)

Q: How long do correspondence audits take?
A: Once you respond, many are closed within 30–90 days, but times vary. If follow-up is needed, it can take longer.

Q: Will a correspondence audit lead to criminal charges?
A: Very rarely. Most correspondence audits concern documentation issues or math errors. Criminal investigations involve different procedures and are not handled through simple correspondence audits.

Q: Can I call the IRS about the notice?
A: Yes — the notice usually includes a contact number. However, keep calls brief and factual; always follow up in writing and keep records.

Sources and further reading

Professional disclaimer: This article is educational and does not replace personalized tax advice. For questions about your specific situation, consult a licensed tax professional. In my practice, careful documentation and timely responses reduce stress and materially improve outcomes in correspondence audits.