Correspondence vs Field Audits: What to Expect and How to Prepare

Quick comparison: correspondence vs field audits

A correspondence audit is the IRS’s most common, lowest-contact review. The agency sends a letter asking for documents or clarification about one or two items on your return — for example, a missing Form 1099, a questionable deduction, or a credit. You respond by mail (or sometimes online), the IRS reviews your materials, and the matter is often closed.

A field audit is the intensive version. An IRS agent visits your home, office, or accountant’s office to examine books, records, and business operations. Field audits are more likely when the IRS suspects widespread reporting issues, unreported income, or complex business transactions. They can cover multiple years and may include interviews and follow-up requests.

(For an operational checklist to organize documents ahead of any audit, see our article: Preparing for a Tax Audit: Documents, Timeline, and Tips.)

Why the IRS chooses one type over the other

The IRS triages cases based on risk, potential change, and resource allocation. Correspondence audits are efficient when a single item can be verified by documents. Field audits are used when the issue is complex or when an in-person review will likely yield larger adjustments or uncover other problems.

Key triggers for each:

• Correspondence: mismatched information returns (W-2 / 1099), minor deduction questions, math errors, missing forms. (See: What Triggers an IRS Correspondence Audit and How to Prepare.)
• Field: sustained losses, large or unusual deductions, signs of unreported income, payroll tax problems, or a return flagged by related examinations.

Authoritative sources: IRS Publication 556 and the IRS Small Business & Self-Employed audit guidance explain these distinctions and the rights you retain during an audit (IRS, 2024). See also the IRS audits overview: https://www.irs.gov/businesses/small-businesses-self-employed/audits

Typical timeline and communication method

• Correspondence audit: the IRS usually gives 30 days to respond to the letter, although some notices allow 60 days. After you submit documents, expect several weeks to a few months for a final response depending on IRS workload and the clarity of your materials.
• Field audit: you will receive an initial notice outlining the records requested and an appointment date. The on-site visit can last a day to several days; the overall process (including follow-ups) often spans months and can extend to a year for complex matters.

These timelines reflect current IRS practice as of 2025; actual durations vary by IRS office and case complexity.

What to expect during a correspondence audit

1. Read the letter carefully. It will identify the return year(s) and the specific items under review. Note the deadline.
2. Gather supporting documents: copies of the tax return in question, source documents (W-2s, 1099s), receipts, canceled checks, bank statements, and any third‑party statements.
3. Prepare a cover letter that identifies the taxpayer, the tax year, a brief explanation, and a list of enclosed documents.
4. Keep copies of everything you send and use certified mail or upload via the IRS secure portal when available.
5. Expect either acceptance, a request for more information, or a proposed change with an explanation of tax due and penalties.

Practical tip from my practice: include a concise explanation for ambiguous entries (for example, why a client claimed a specific business expense). A short narrative often prevents back-and-forth and speeds resolution.

(If you want a focused template, see: Preparing a Document Packet for an IRS Correspondence Audit.)

What to expect during a field audit

1. Initial notice and scheduling: you’ll get an appointment date and a list of documents to have available. You can request the agent meet at your accountant’s office instead of your home or business.
2. On-site review: the agent reviews books, bank records, invoices, payroll records, leases, and electronic records. They may interview you or staff.
3. Closing conference: the agent explains proposed changes. You will have the opportunity to present additional evidence.
4. Formal report: the IRS issues an audit report or a Revenue Agent Report with proposed adjustments. You can agree, appeal (file a protest), or request a conference with Appeals.

From my experience representing business clients: arriving with a well-organized binder (or searchable electronic files) and a designated person who knows the books makes the process far less disruptive.

(See: Preparing for an IRS Field Audit: Checklist for a practical step-by-step.)

Documentation checklist

Core documents for both audit types:

• Copies of the filed tax return and related schedules
• W-2s, 1099s, K-1s
• Bank statements (business and personal)
• Credit card statements tied to business use
• Canceled checks and payment receipts
• Invoices, contracts, and lease agreements
• Payroll registers and Forms 941/940
• Depreciation schedules and asset purchase receipts
• Mileage logs and travel records
• Supporting documentation for credits (child tax credit, education, energy credits)

Field-audit specific items:

• Detailed general ledger and trial balance
• Point-of-sale reports and daily sales summaries
• Employee files and payroll tax deposit records
• Inventory counts and valuation documentation

If original records are missing, prepare an affidavit detailing why the records are unavailable and provide reasonable substitute evidence (bank statements, vendor records, vendor letters).

How to respond — do’s and don’ts

Do:

• Respond by the deadline; request extra time in writing if needed.
• Keep communications professional and documented.
• Provide clear, labeled exhibits that map directly to the IRS’s questions.
• Get professional help for complex issues or field audits. A tax pro can enter a limited or full Power of Attorney (Form 2848) so they can speak to the agent on your behalf.

Don’t:

• Ignore the notice. Unanswered letters can become assessments and collections.
• Volunteer extra information beyond what’s requested — only provide what’s relevant unless asked.
• Destroy documents. The law requires you to keep records for a reasonable period (typically three years; longer for material omissions). See IRS guidance on recordkeeping.

Representation and appeals

You have the right to representation. A CPA, attorney, or enrolled agent can represent you before the IRS. Consider engaging representation when:

• The audit involves multiple years or complex transactions
• There is potential for criminal exposure (unreported income or fraud allegations)
• You prefer a professional to negotiate or prepare an appeal

If you disagree with findings, you can file an appeal with the IRS Office of Appeals or file a petition in U.S. Tax Court within the statutory period. Early consultation with a professional preserves options and deadlines.

For steps on who to appoint and how to use POA, read our guide: The Role of Power of Attorney in Tax Audits and Collection Matters.

Real-world examples (anonymized)

• Correspondence audit: A taxpayer received a notice about unreported 1099 income. We compiled the client’s bank records and a corrected 1099 that showed the amount was properly reported on Schedule C. The IRS closed the case within six weeks without assessment.

• Field audit: A restaurant owner faced a field audit covering payroll, sales reporting, and expense substantiation for three years. We prepared a reconciled set of books, payroll records, and vendor invoices. The process took six months; the final adjustment was limited to a single line item after negotiation.

These outcomes reflect common patterns: correspondence audits often resolve quickly; field audits require time and organization.

Common misconceptions

• “Having a tax preparer prevents audits.” False — professional preparation reduces risk but doesn’t eliminate it.
• “An audit means I did something illegal.” False — audits are checks for accuracy; many are resolved with documentation.
• “I can ignore a mail audit; it’s not serious.” Dangerous — ignoring notices risks penalties, interest, and possible enforced collection.

Practical preparation checklist (30–60 days before an appointment or while you wait for a response)

1. Pull the tax return(s) under review and assemble a reconciliation to your books.
2. Create clear, labeled folders or electronic files that match the IRS’s requests.
3. Draft a one-page summary explaining unusual items (e.g., large asset purchases, owners’ draws, related-party transactions).
4. Identify who will be your point person — tax professional, bookkeeper, or owner — to coordinate responses.
5. If the audit is a field visit, consider practicing a short opening statement and instruct staff on how to handle agent requests (refer them to the designated person).
6. Ensure any Power of Attorney (Form 2848) is completed before the agent arrives if you intend to have representation speak for you.

Costs and potential tax impacts

Audits can result in no change, an increase in tax due (plus interest and penalties), or sometimes a refund. The financial impact varies by the issue’s size and whether penalties apply. Budget for professional fees; field audits typically cost more in professional time because they require detailed analysis and representation.

When to call a professional immediately

• You receive a field-audit notice.
• The audit mentions potential fraud, criminal referral, or severe underreporting.
• Multiple years are under examination or the IRS seeks bank records and third-party information.

Early expert involvement preserves rights and helps control the scope of the examination.

Resources and authoritative citations

• IRS Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund: https://www.irs.gov/pub/irs-pdf/p556.pdf
• IRS audits overview for small businesses and self-employed taxpayers: https://www.irs.gov/businesses/small-businesses-self-employed/audits

FinHelp internal resources:

• Preparing for a Tax Audit: Documents, Timeline, and Tips — https://finhelp.io/glossary/preparing-for-a-tax-audit-documents-timeline-and-tips/
• Preparing for an IRS Field Audit: Checklist — https://finhelp.io/glossary/preparing-for-a-field-audit-documentation-checklist/
• Preparing a Document Packet for an IRS Correspondence Audit — https://finhelp.io/glossary/preparing-a-document-packet-for-an-irs-correspondence-audit/

Final takeaways and next steps

Correspondence audits and field audits are different in scope, cost, and the level of intrusion. Treat every IRS notice seriously, respond on time, and organize documentation to match the IRS’s request. For most correspondence audits, careful documentation and a clear cover letter resolve issues quickly. For field audits, invest time upfront to organize electronic and physical records and consider professional representation.

Professional disclaimer: This article is educational only and does not constitute legal, tax, or financial advice. For guidance tailored to your situation, consult a qualified tax professional.

If you’re preparing for an IRS contact now, start by building the document packet and scheduling a consultation with a tax professional. See our guide on when to engage a pro: When to Hire a Tax Professional for an Audit or Appeal.