Why a concise audit response packet matters
A concise audit response packet is the difference between a one-time documentation request and a prolonged audit process. In my 15 years preparing returns and representing taxpayers before the IRS, I’ve seen audits close quickly when submissions are organized, complete, and directly tied to the auditor’s issues. Conversely, untidy or unfocused packets lead to follow-up requests, delays, and sometimes unnecessary adjustments.
IRS audits are not arbitrary; auditors work from the items listed in their notice. Your job is to make it easy for the auditor to find and verify the information they asked for (see IRS Publication 556 for general audit procedures) (https://www.irs.gov/pub/irs-pdf/p556.pdf). For correspondence audits, many notices give a typical response window of about 30 days — always check the specific deadline on your notice.
Preparing the packet: core principles
- Prioritize relevance. Include only documents that directly address the items in the audit notice.
- Organize logically. Use a table of contents, section dividers, and numbered pages.
- Annotate clearly. Tie each document to the line or code on the tax return or the auditor’s question.
- Preserve originals. Send clear copies but retain originals in your files.
- Keep a copy. Keep a full duplicate of exactly what you send, with dates and tracking numbers.
The must-have checklist (pack this first)
- Cover letter and summary
- One-page cover letter addressed to the contact on the notice. Identify the taxpayer (name, EIN/SSN, tax year, form number, and case or notice number). State that the packet responds to the specific notice and list what is included.
- A concise two- to three-paragraph summary highlighting the taxpayer’s position for the disputed items (e.g., “We are submitting sales invoices and bank deposits that substantiate the reported income for Q2”).
- Copy of the tax return(s) under audit
- Include the full filed tax return(s) and all schedules. Highlight the line items at issue and attach a brief note that ties each supporting document to the corresponding line.
- Primary supporting records
- Bank statements (highlight relevant deposits/withdrawals and annotate with check numbers or invoice numbers).
- Invoices and receipts (organized by date and mapped to entries on the return).
- Sales journals, deposit slips, merchant statements (for cash and card sales).
- Income verification forms
- W-2s, 1099s, K-1s, and similar forms. If corrected forms were issued, include both original and corrected versions with an explanation.
- Expense substantiation
- Receipts, canceled checks, credit card statements, mileage logs, and proof of business purpose for travel, meals, and entertainment (note recent IRS rules about meal deductibility).
- For home office, provide a floor plan, square-footage calculations, and a reconciliation of actual expenses to the amount claimed.
- Business accounting records (if applicable)
- Profit & Loss statement and balance sheet for the tax year(s) in question with reconciliation to the return.
- General ledger extracts showing account activity tied to audited items.
- Contracts, agreements, and legal documents
- Contracts, leases, partnership agreements, settlement statements, or closing statements supporting large transactions.
- Correspondence history
- All prior letters exchanged with the IRS related to this audit. Include notes of any telephone conversations (date, time, name of IRS representative, and summary).
- Identity documents and authorizations
- If asked, include photo ID copies and completed Form 2848 (Power of Attorney) or Form 8821 (Tax Information Authorization) if a representative is acting on your behalf.
- Miscellaneous supportive evidence
- Proof of payments, canceled checks, third-party statements, and contemporaneous documentation (e.g., contracts that show intent or proof of performance).
How to package and label the packet
- Start with a clean binder or a letter-size, three-ring folder. Use clear, printed dividers for each checklist section.
- Include a cover page with contact info, the notice number, tax year, and page count.
- Use a table of contents with section names that match the dividers.
- Number every page and add short sticky notes or callouts on copies that point the examiner to the relevant lines on the return.
- Provide an index sheet for voluminous records (“See bank statement pages 5–16 for deposits related to invoice #1234”).
Electronic submission and security
The IRS increasingly accepts electronic submissions for correspondence audits and virtual exams. When the notice directs you to an IRS secure portal or asks for emailed attachments, follow the instructions carefully and submit PDF files that are searchable and not password-protected unless specifically requested. For guidance on sharing documents securely, see our article on preparing a virtual audit: how to share documents securely with the IRS.
If you send physical documents, use certified mail with return receipt or a trackable courier and record the tracking number and date delivered.
Annotation tips that save time
- Add a brief sticky-note-style explanation to each group of documents: what it is, the time period, and which tax-return line it supports.
- When you reference bank transactions, show the math: “Deposit $12,500 = Invoice 1001 ($6,000) + Invoice 1002 ($6,500)” with page numbers for source documents.
- Use color coding: green for income, blue for deductible expenses, red for disputed items.
Common pitfalls and how to avoid them
- Sending everything without structure: bulky unorganized submissions increase the chance the examiner misses key evidence.
- Missing the deadline: many correspondence audits expect a response within 30 days — check the notice and request an extension in writing if needed.
- Failing to tie evidence to the return: send supporting items with clear cross-references to the exact return line or schedule.
- Submitting incomplete copies: high-resolution, legible copies prevent re-requests.
- Destroying originals: never send the only copy of an original document.
When to bring in a professional
Contact a tax professional when: the dollar amounts are large, the tax issues are technical (e.g., basis adjustments, depreciation, international tax), legal documents are involved, or if you’re uncomfortable communicating directly with the IRS. In practice, a well-prepared representative can reduce the number of follow-up contacts and can negotiate timing, present legal arguments, and prepare concise written responses.
See our related guidance on recordkeeping best practices to survive an IRS audit and on preparing for a correspondence audit: Preparing for a Correspondence Audit: Documents and Timelines.
Sample one-page cover letter (use as a template)
[Taxpayer name]
[Taxpayer address]
[Date]
IRS [Office address from notice]
Re: Notice Number [XXX-XXXX], Tax Year [YYYY], Taxpayer: [Name], SSN/EIN: [XXX-XX-XXXX]
Dear [Examiner name]:
Enclosed please find the documents in response to the above-referenced notice. This packet contains the items requested in the notice, organized as follows: 1) copy of the tax return; 2) bank statements and reconciliations; 3) invoices and receipts; 4) contracts. Each item is tabbed and annotated to show the related line on the return.
If you need additional information, please contact me (or our authorized representative, if applicable) at [phone and email]. Thank you for your review.
Sincerely,
[Signature]
After you submit the packet
- Track delivery and confirm receipt with the IRS contact on the notice (keep records of any phone calls).
- If you do not receive acknowledgment within a reasonable time frame, follow up in writing and keep copies of every communication.
- Prepare to answer follow-up questions by keeping an organized working file and being ready to provide originals if requested.
Final notes and authoritative sources
This checklist is educational and intended to help taxpayers gather and present documentation efficiently. For official procedures and timelines, consult IRS Publication 556 (Examination of Returns, Appeal Rights, and Claims for Refund) (https://www.irs.gov/pub/irs-pdf/p556.pdf) and the IRS audit overview pages (https://www.irs.gov/businesses/small-businesses-self-employed/audits-exams-and-appeals).
Professional disclaimer: This article provides general information and should not be treated as legal or tax advice. For case-specific advice, consult a qualified tax professional or attorney.
Author’s note: In my experience, the most persuasive packets are short, direct, and well-referenced. Spend more time mapping each document to the issue than on including every single unrelated file — it will make the auditer’s job easier and speed your resolution.
