Overview

A field audit is the most comprehensive type of IRS examination. Unlike a mail audit, an agent visits your location and reviews original records. The better organized and responsive you are, the faster the audit typically moves. For official IRS guidance, see the IRS Audits Overview and Publication 556 on examination and appeal rights (irs.gov).

Before the audit: immediate steps

  • Read the IRS notice carefully and note the deadline to respond (most letters state a date; many requests expect a response within 30 days).
  • Contact a qualified tax professional if you’re unsure. I’ve seen clients reduce audit time by 40–60% simply by hiring a CPA or tax attorney experienced with field audits.
  • Consider executing Form 2848 (Power of Attorney) so your representative can speak to the agent on your behalf.
  • Don’t sign anything you don’t understand. If the agent asks for documents, provide copies unless they explicitly request originals.

Create an audit binder (how to organize)

  • Cover letter: one-page summary that explains your business, the tax years under review, and a short description of the documents you’ll provide.
  • Table of contents: list sections and item locations.
  • Tabs by category: Income, Expenses, Bank Records, Asset Records, Payroll, Prior Returns, Correspondence.
  • Label each document with a unique ID and date. Make copies—give the agent a copy and keep originals.

Essential documents checklist

  • Income: W-2s, all Forms 1099 (NEC, MISC, INT, DIV), sales records, merchant processor reports.
  • Bank records: monthly statements, canceled checks, reconciliations, electronic payment confirmations.
  • Expense support: itemized receipts, invoices, vendor statements, credit card statements.
  • Payroll: Form 941/940 filings, payroll register, W-3s, Forms W-2.
  • Entity records: business licenses, contracts, leases, loan agreements.
  • Asset and depreciation: purchase invoices, titles, depreciation schedules (Form 4562 supporting data).
  • Prior-year tax returns, workpapers, and any correspondence with the IRS.
  • Logs: mileage logs, travel diaries, and other contemporaneous records that substantiate deductions.
  • Accounting records: general ledger, trial balance, bank reconciliations, and year-end financials.

If the audit focuses on a single issue (for example, business expenses or home office), prioritize those records first. See our guide on Preparing an Audit Binder: Documents to Organize Before an IRS Audit for a sample binder layout.

During the field visit

  • Be punctual and professional. Designate a quiet workspace and provide the agent copies of your table of contents and summary.
  • Answer questions briefly and truthfully. Avoid volunteering extra information outside the requested scope.
  • If you don’t know an answer, say so and offer to follow up with documentation.
  • Keep a written log of questions asked and documents provided—date-stamped notes protect you later.

Timeline: what to expect

  • Notice to scheduling: often 2–8 weeks depending on agent workload and availability.
  • Onsite review: can be a few hours for a narrow issue to several days for complex business examinations.
  • Follow-up requests: agents commonly ask for additional documents; expect these within weeks of the visit.
  • Agent review and report: after the field work, the agent prepares a report (audit report or Form 4549 for individuals) and proposes adjustments. This internal review can take weeks to months.
  • Appeals and resolution: if you disagree, you have appeal rights. Many cases resolve with minor adjustments; complex disputes can extend several months or longer (see IRS Publication 556).

Key legal timelines (statute of limitations)

  • Generally 3 years from the date you filed the return for the IRS to assess additional tax.
  • Six years if you omitted more than 25% of gross income.
  • No statute of limitations for fraudulent returns or if you fail to file. (Source: IRS guidance and Publication 556.)

Common mistakes and how to avoid them

  • Giving incomplete documentation: provide full supporting evidence; missing receipts are a common weakness.
  • Disorganized records: an unstructured set of documents increases the chance of unfavorable findings and prolongs the audit.
  • Taking the agent’s informal comments as final: only the agent’s written report or a signed Form 4549/appealable notice is binding.

Communication and representation

  • You have the right to representation at any point. A tax professional can prepare your audit packet and negotiate with the agent.
  • Use Form 2848 to authorize an agent. If you hire a representative, prepare a clear engagement letter defining scope and fees.

After the audit: steps if adjustments are proposed

  • Review the proposed changes and request an explanation in writing.
  • You can agree, propose concessions, or file an appeal. Consider the Appeals Office for an independent review before paying any proposed tax.

Practical tips I use with clients

  • Prepare a two-page executive summary that highlights how your records support major items (income, cost of goods sold, key deductions).
  • Number every page in your binder and provide an index—agents appreciate clarity and may finish the audit faster.
  • For recurring records (mileage, receipts), maintain contemporaneous logs; reconstruction after the fact is weaker evidence.

Related FinHelp resources

Authoritative sources

Disclaimer

This article is educational and does not constitute legal or tax advice. Consult a qualified tax professional about your specific situation.