Why a focused audit packet matters

An audit packet is your opportunity to present the facts cleanly and professionally. Auditors respond to organization: neatly labeled, indexed evidence speeds review and reduces follow‑up requests. According to the IRS, taxpayers are expected to keep records that support income, deductions and credits (see IRS Publication 552) and to produce those records when asked (IRS, “Understanding Audits”). Presenting those records in a single, logical packet improves the odds of a timely, favorable outcome.

Immediate steps after receiving an audit notice

  • Read the notice carefully and note the scope (items and tax years listed) and the deadline for response. The notice will indicate if this is a correspondence (mail) audit, field audit, or office audit. (IRS, “Understanding Audits”: https://www.irs.gov/individuals/understanding-audits)
  • Do not panic. Begin collecting documents immediately and create a master checklist.
  • If you want a representative to communicate with the IRS, submit Form 2848 (Power of Attorney) or Form 8821 (Tax Information Authorization) promptly (IRS forms pages).

Core items to include (detailed checklist)

Assemble copies of the items below for the tax year(s) under examination and for related years when asked. Always include a single cover page listing contents.

  1. Tax returns and schedules
  • Exact copies of the filed Form 1040 (or 1065, 1120, etc.) and all schedules for the years under audit. Mark the line items under review.
  1. Summary statement or reconciliation
  • A one‑page executive summary that maps each auditor request or questioned line item to the documents you provide (page numbers, exhibit IDs). Example: “Schedule C, Line 22 — Vehicle expenses. See Exhibit 5: Mileage log and December bank statements, pages 12–17.”
  1. Financial statements
  • Profit & loss statements, balance sheets, cash‑flow summaries, and trial balances (for businesses). These help an auditor understand the context of transactions.
  1. Bank and credit card statements
  • Full monthly statements for the year(s) in question, ideally with deposits and charges highlighted and cross‑referenced to invoices or receipts.
  1. Receipts, invoices, and bills
  • Originals or clear copies for deductions and purchases. Group by category (travel, meals, rent, supplies) and include a short explanation for each clustered group.
  1. Logs and ledgers
  • Mileage logs, depreciation schedules, employee time records, and expense ledgers. If a log is used as support, it must be contemporaneous and consistent.
  1. Contracts and third‑party documents
  • Client contracts, signed agreements, closing statements, 1099s, W‑2s, and other third‑party proofs of income or payments.
  1. Prior correspondence and prior year audit results
  • Any letters from the IRS, penalty notices, or prior audit adjustments. This shows history and context.
  1. Form 2848 or representation letter (if applicable)
  • If you are represented, include a signed Power of Attorney (Form 2848) so the auditor recognizes your representative’s authority.
  1. Supporting workpapers and calculations
  • Spreadsheets, amortization schedules, and summaries that show how you calculated figures claimed on the return.

Organization and presentation — how to package documents

  • Use a table of contents and numbered exhibits. Start with a concise cover letter and the one‑page summary mapping. Number every page (e.g., Exhibit 3, Page 4 of 28).
  • Use dividers or clearly labeled PDF bookmarks for electronic packets. Maintain a consistent naming scheme for files: YEARTypeExhibitNumber (e.g., 2022BankStmtEx3.pdf).
  • If you submit electronically, ensure PDFs are searchable (OCR) so an auditor can quickly find terms. If mailing, provide a binder with tabs and duplicate copies if the packet is large.
  • Highlight or annotate the specific lines/entries on bank statements or receipts that tie directly to the tax return.

How to write the cover letter and summary

  • Keep the cover letter professional and factual. State what’s enclosed, the tax year(s), the reason the IRS selected the return (if known), the point of contact, and whether you are represented.
  • The one‑page summary should list each auditor item with a short explanatory note and the exhibit numbers. This is the most important single page you can provide.

Delivery and timing

  • Respond by the deadline on the notice. If you need more time, request it in writing (and indicate the reason). The IRS often grants reasonable extensions.
  • For mailed packets, send by tracked or certified mail and keep proof of delivery.
  • For in‑person field audits, bring the packet in organized binders and provide a duplicate for the auditor.
  • Avoid sending original documents unless the IRS specifically requests originals — send high‑quality copies and keep the originals in your records.

What not to send and common mistakes to avoid

  • Don’t include irrelevant personal documents; they create confusion and increase review time.
  • Avoid sending unorganized boxes of paperwork. Lack of indexing leads to repeated requests.
  • Don’t volunteer extra information outside the audit scope—stick to requested items unless additional documents clearly explain the issue.
  • Don’t miss deadlines; failure to respond can lead to default adjustments, penalties, or enforced collection.

Representation and communication

  • A tax attorney, CPA, or enrolled agent can represent you before the IRS. If represented, include Form 2848 so the IRS communicates with your representative.
  • Keep a written log of all communications with the IRS (dates, names, phone numbers, and summary of what was said). This helps if there is disagreement later.

Electronic packets and security

  • Encrypt sensitive files when sending via email and use secure portals or encrypted file‑sharing services. Never send passwords or account access directly within the same email as the packet.

Timeline and record retention

  • The usual statute of limitations to audit a return is three years after the return’s due date or filing date (whichever is later); six years applies where income omission exceeds 25%; there is no statute of limitations for fraud or fraudulent returns (IRS, “Statute of Limitations”). For practical safety, retain business records and tax returns for at least seven years.

Example scenarios from practice

In my 15 years of practice, a common success story involves a small business owner selected for a correspondence audit about Schedule C expenses. By delivering a packet with a two‑page summary, an itemized expense table, scanned receipts grouped by category, and bank statements with deposits highlighted, we resolved the matter with no adjustments. Conversely, clients who initially sent unsorted receipts often faced additional requests and prolonged reviews.

Appeals and unresolved items

  • If the auditor proposes an adjustment you disagree with, you have the right to appeal within the IRS Appeals Office. Keep copies of everything and ask for an explanation in writing before signing any waiver or consent form.

Helpful resources and related guides

Practical templates

  • Quick cover letter template (use your letterhead):

    Dear [Auditor Name or IRS Agent],

    Enclosed please find the audit packet for [Taxpayer Name], Tax Year(s) [xxxx]. The packet includes a table of contents, one‑page summary mapping the auditor’s items to exhibits, and labeled supporting documentation. We are represented by [Representative Name, Firm] (Form 2848 enclosed). Please contact [Phone/Email] for any questions.

    Sincerely,
    [Taxpayer or Representative]

  • Executive summary format: two columns — “Auditor Item” and “Exhibits and Notes”. Keep it to one page.

Professional disclaimer

This article is educational and does not constitute legal or tax advice for your specific situation. If you are under audit, consult a qualified tax professional, CPA, or tax attorney for advice tailored to your facts and applicable law.

Authoritative sources: IRS Publication 552 (Recordkeeping), IRS “Understanding Audits” pages, and IRS guidance on Form 2848 and the statute of limitations. Visit https://www.irs.gov for the latest forms and detailed rules.

(Edited for clarity and practical direction by a tax practitioner with 15 years of audit experience.)