Preparing for a Correspondence Audit: Documents and Timelines

Overview

A correspondence audit is the IRS’s most common, least intrusive audit type: it focuses on specific line items and is conducted almost entirely through letters. The IRS generally initiates these reviews when its information-matching systems flag a difference between what you reported and what third parties submitted (W-2s, 1099s, broker statements). Common triggers include unreported income, unusual deduction patterns, and mismatched information returns.

This guide gives a practical, step-by-step plan to gather documents, meet deadlines, and assemble a clear response package so you can resolve a correspondence audit with the least friction and risk.

(Author note: In my 15+ years preparing taxes and supporting clients through audits, timely organization and a short, well-documented response are the most reliable ways to close a correspondence audit quickly.)

How correspondence audits begin and the notices to expect

Most correspondence audits start with a formal IRS notice—commonly a CP2000 (proposed changes for unreported or misreported income) or other IRS letters asking for verification. Each notice includes a description of the discrepancy and a deadline to respond. Read the notice carefully for the specific items under review and the required response method.

• CP2000: Proposes changes based on IRS matching of third-party documents with your return (see IRS CP2000 page for details) IRS: CP2000 Notice.
• Other notices: The IRS Notice/Letter page explains types of correspondence and instructions for replies IRS: Understanding notices or letters.

Always keep the original notice and make a copy before sending anything back.

Immediate steps after you receive the notice (first 48–72 hours)

1. Stop and read the notice fully. Note the deadline and the exact items questioned.
2. Don’t ignore the notice. Most responses are due in about 30 days; some allow 60. Missing a deadline often leads to proposed adjustments and additional penalties.
3. Make whole-copy scans or photocopies of the IRS notice for your records.
4. Identify which tax year and which forms/lines are in question.
5. Start a response folder (digital + physical). Create a checklist labeled with the IRS notice number and the tax year.

Documents to gather (detailed checklist)

Gathering the right documents is the core of a successful response. Send clear, organized copies — never original documents. Keep originals in a secure location.

• Tax return copy: A full copy of the filed return for the year in question (Form 1040 and schedules, or business returns like 1120/1065).
• Information returns and wage statements: W-2s, 1099-NEC/1099-MISC, 1099-INT, 1099-DIV, 1099-B, 1099-R, K-1s, and any corrected forms (if applicable).
• Bank and brokerage statements: Statements that show deposits, interest, dividends, and trades tied to amounts on the return.
• Receipts and invoices: Business receipts, sales invoices, and vendor invoices that support deductible expenses. Group by expense category (e.g., supplies, travel, meals).
• Canceled checks or proof of payment: Bank-cleared checks, ACH confirmations, or credit card statements showing payments.
• Ledgers and accounting reports: Profit & loss statements, general ledger extracts, and reconciliations for the tax year. For small businesses, QuickBooks reports or similar reports are helpful.
• Mileage logs and travel records: If vehicle use or travel costs are questioned, provide contemporaneous mileage logs, client calendars, or appointment records.
• Contracts, engagement letters, or invoices: For disputed income or contractor vs employee issues, include copies of contracts and payment records.
• Signed explanatory statements: A brief, signed statement explaining any discrepancies, corrected math, or reasons for timing differences (e.g., late 1099 reporting).

Time estimates: For most individuals, assembling these materials takes 1–3 weeks depending on whether you must request corrected 1099s or bank archives.

How to assemble the response package

A clear, indexed packet reduces follow-up requests and speeds resolution. Include a simple cover letter and an organized table of contents.

• Cover letter: Short, one-page letter that states the notice number, taxpayer name, tax year, your taxpayer identification (SSN or EIN — last four only if mailing publicly), a short summary of what you are providing, and a contact phone number. Sign and date it. (A template appears later in this article.)
• Table of contents / index: Number attachments and label each item to match exhibits referenced in your cover letter.
• Exhibit tabs: Group documents by issue (income, expenses, credits). Include a one-line explanation for each document: what it is and why it matters.
• Copies not originals: Send clear photocopies or scanned PDFs. If mailing, use double-sided copies for compactness only when legible.
• Computation schedules: If adjustments require math, attach a spreadsheet or handwritten schedule showing corrected calculations and sources for each figure.
• Signed declarations: If facts are contemporaneous and factual (e.g., business purpose of an expense), a signed declaration can be helpful. Avoid speculative statements; stick to verifiable facts.

Delivery methods and recordkeeping

• Mail: Most correspondence audits are resolved by mail. Use certified mail with return receipt when sending physical packets — this documents delivery.
• Fax: Some IRS letters include an authorized fax number. Confirm the number in the notice and keep fax confirmations.
• Electronically: The IRS is expanding secure electronic exchanges, but not all correspondence notices accept uploaded files. Follow the notice instructions.

Always keep a dated copy of everything you send and a copy of the envelope, tracking label, or fax confirmation. Maintain digital backups (PDFs) in a secure folder for at least three years from the tax filing date — longer if the issue concerns potential substantial understatements.

Timelines you should expect

• Immediate response window: Most letters request a reply within 30 days; some give 60 days. The exact timeframe appears on the notice and is the critical deadline to meet.
• IRS review time after receipt: If you respond fully, resolution often occurs within 6–12 weeks, but complex items or heavy IRS backlogs can extend this to several months.
• If you miss the deadline: The IRS may make a proposed adjustment and send a bill. You can still respond or appeal, but penalties and interest can accrue while you wait.
• Statute of limitations: Generally, the IRS has three years after filing to assess additional tax; for substantial omissions, six years may apply. Keep records accordingly. (See IRS recordkeeping guidance) IRS: Recordkeeping.

If you disagree with the proposed change

If you disagree, submit a concise explanation and documentation supporting your position. If the IRS still proposes an adjustment, you generally have administrative appeals options and further formal appeal rights. For complex or high-stakes issues, consider retaining a tax professional or an enrolled agent to represent you.

See our related guidance on assembling a formal response: Preparing a Response Package for an IRS Correspondence Audit. Also useful: Preparing for an IRS Correspondence Audit: Records to Gather and our recordkeeping best practices article: Recordkeeping Best Practices to Survive an IRS Audit.

Common mistakes to avoid

• Sending originals instead of copies. Originals can be lost; the IRS prefers copies.
• Over-sending unrelated documents. Keep the packet focused on the specific issues to avoid confusion.
• Late responses. Missing deadlines increases the chance of adverse adjustments and penalties.
• Poor organization. Documents that are unlabeled or unindexed cause follow-up requests and slow the process.

Practical timeline and action plan (example)

• Day 1–3: Read the notice, copy it, and open a folder. Note the response deadline.
• Day 4–10: Request missing 1099s, bank archives, or vendor invoices.
• Day 11–21: Compile and organize supporting documents and create an index.
• Day 22–28: Draft cover letter, finalize packet, and send via certified mail or allowed method with delivery confirmation.
• Weeks 6–12: Expect reply or resolution; maintain readiness to send supplemental documents if asked.

Sample cover letter (short template)

[Taxpayer name]
[Address]
[Date]

Re: IRS Notice [notice number], Tax Year [YYYY]

To Whom It May Concern,

Enclosed please find documentation in response to the IRS notice referenced above. Exhibits 1–N are indexed in the attached table of contents and correspond to the items listed in the notice. Please contact me at [phone] or [email] with any questions.

Sincerely,

[Taxpayer signature]
[Printed name]

When to seek professional help

Contact a qualified tax professional if:

• The proposed adjustment is large or complex;
• You believe the IRS’s data is incorrect and you need assistance producing corrective information returns;
• You’re unsure how to draft legal or factual statements; or
• You prefer representation.

If you hire a pro, provide them with full copies of the notice and your supporting documents and, if necessary, complete Form 2848 (Power of Attorney) so they can represent you directly.

Final notes and authoritative sources

Responding quickly, sending clear copies of supporting documents, and keeping your response focused are the best defenses in a correspondence audit. For official IRS guidance, review the CP2000 information and general notice guidance on the IRS website: https://www.irs.gov/individuals/cp2000-notice and https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter. For recordkeeping basics, see https://www.irs.gov/filing/recordkeeping.

This article is for educational purposes and does not replace personalized tax advice. If your situation involves significant tax amounts or legal questions, consult a qualified tax advisor or tax attorney.

— End of article