Preparing for a Tax Audit: Documents, Timeline, and Tips

Quick orientation

A tax audit is a review of your tax return and supporting records by the IRS or a state tax authority to confirm reporting accuracy. Preparing well reduces stress and can materially affect the outcome. In my practice over 15 years, clients who hand a clear, indexed packet to an auditor resolve issues faster and with fewer proposed adjustments.

Types of audits and why that matters

• Correspondence audit: Done by mail. The IRS requests specific documents and you mail or upload them. These are the most common and generally the fastest to resolve. (See IRS guidance on correspondence audits: https://www.irs.gov/newsroom/the-tax-audit-process.)
• Office audit: You and your representative meet with an IRS agent at a local office to present records.
• Field audit: An agent visits your home, business, or accountant’s office to examine records on-site; typically used for complex issues.

Knowing the type determines how you package documents and whether you should attend in person or engage a representative.

First actions after you receive an audit notice

1. Read the notice immediately. It explains the scope, requested years, deadline, and auditor contact information. Don’t ignore it — deadlines matter.
2. Confirm it’s real. IRS will initiate by mail; never respond to or click links in suspicious emails or calls. If in doubt, call the IRS number on the notice. (See IRS tips on letters and notices.)
3. Note the request and deadline. Create a task list and calendar reminders for required documents and any scheduled meetings.
4. Decide whether to hire representation (CPA, enrolled agent, or tax attorney). If the audit involves complex issues or large proposed changes, professional representation is usually worth the cost.

The realistic timeline

• Correspondence audits: response requested typically within 30 days; resolution often within 30–90 days after the IRS receives complete documentation.
• Office audits: scheduled meetings usually within 1–3 months; resolution can take several weeks afterward.
• Field audits: may take months to a year depending on complexity.
• Appeals and collection: if you disagree with proposed changes, appeals add more months; collections and installment agreements extend the timeline further.

Keep in mind statutory limits: the IRS generally has three years to audit a return (the statute of limitations), but that period extends to six years when income is understated by more than 25% and is indefinite in cases of fraud or where no return was filed. (IRS recordkeeping and statute guidance: https://www.irs.gov/taxtopics/tc403.)

Essential documents checklist (pack and label)

Organize documents by tax year and issue. Provide a single packet (or a clear digital folder) with a table of contents and tab dividers if paper. Items commonly requested include:

• Identification: copy of the audit notice and a cover letter explaining the contents of the packet.
• Tax returns: copy of the filed return(s) under examination, including schedules and forms.
• Income documents: W-2s, Forms 1099 (NEC, MISC, DIV, INT, K-1s), brokerage statements, Form 1098 (mortgage interest), rental K-1s.
• Supporting ledgers: sales journals, mileage logs, appointment books, or logs for rental and business activity.
• Bank and credit card statements: to corroborate deposits, payments, and expenses.
• Receipts and invoices: for expenses claimed—travel, supplies, repairs, charitable contributions with charity letters and acknowledgment for gifts over $250.
• Payroll records: payroll register, Forms W-2 and W-3, payroll tax filings and proof of payment.
• Contracts and legal documents: leases, purchase agreements, loan documents.
• Accounting records: general ledger, profit & loss statements, balance sheet, fixed asset schedules.
• Prior correspondence: any previous IRS letters, notices, or prior audit results.

Tip: create a one-page index and an issues memo that explains any unusual items (e.g., a large one-time sale, an inherited asset disposition). The issues memo gives context and can speed the reviewer’s work.

How to organize so auditors can find what they need

• Use clear labels (e.g., 2022 > Income > 1099-NEC).
• Provide scanned PDFs for correspondence audits with consistent file names (e.g., 2022W2CompanyName.pdf).
• Highlight or tab the exact page that supports a specific line on the return and reference the line number in your cover letter.

See our practical packet examples: Preparing a Document Packet for an IRS Correspondence Audit and Preparing for an IRS Office Audit: Checklist.

Preparing responses: what to include, what to avoid

Include exactly what’s requested. Provide clean, readable copies rather than originals (retain originals). Don’t overshare: extra unrelated documents can create new questions. Keep communications factual and concise.

If you don’t have a requested document, explain why and offer alternative substantiation (bank statements, invoices, contemporaneous logs). The IRS accepts reasonable substitute evidence if originals are unavailable.

Working with a tax professional

A tax pro can:

• Review the notice and identify the precise scope of the audit.
• Prepare a legal and factual response.
• Represent you in person or during calls (you don’t need to attend if you have representation).

When I represent clients, I prepare a narrative that ties documents to return line items and anticipates follow-up questions — this often reduces additional requests and speeds resolution.

If you can’t afford full representation, at minimum get a consultation to confirm your response strategy.

Common pitfalls and how to avoid them

• Ignoring the notice: always respond to avoid default assessments.
• Sending disorganized records: do not submit a pile of unindexed paperwork.
• Volunteering extra issues: answer only what’s requested unless asked for more.
• Missing deadlines: request extensions in writing if you need more time; do this before the deadline.
• Destroying records too soon: follow IRS retention rules—generally keep records for at least three years, longer if circumstances require. (IRS recordkeeping guidance: https://www.irs.gov/taxtopics/tc403.)

Penalties, adjustments, and appeals

If the auditor proposes adjustments, you’ll get a written report (e.g., 5701 letter for correspondence or a report for field audits). Proposed additional tax usually includes interest and sometimes penalties. If you disagree, you can:

• Ask for an explanation and provide additional evidence.
• Request a meeting or a second review.
• File an administrative appeal within IRS timelines; appeals are independent and can resolve disputes without going to tax court.

If the proposed assessment is finalized and you still disagree, options include paying under protest and suing in U.S. Tax Court or filing a refund suit in district court. These are advanced steps—get legal counsel.

Digital records and best practices

• Use cloud backup with timestamped files.
• Keep a searchable digital index and maintain the original file names.
• Preserve metadata when possible (many audits check electronic trails).

Final checklist before you send or present documents

• One-page cover letter summarizing contents and the reason for the documents.
• Index and tabbed sections or named folders.
• Copies—not originals—unless the IRS specifically asks for an original.
• Contact information for the preparer and taxpayer.
• A short issues memo explaining unusual items.

Helpful resources

• IRS: Understanding the Audit Process (official overview) — https://www.irs.gov/businesses/small-businesses-self-employed/understanding-audit
• IRS: The Tax Audit Process — https://www.irs.gov/newsroom/the-tax-audit-process
• IRS: How long should I keep records? — https://www.irs.gov/taxtopics/tc403

For practical packet templates and a step-by-step office-audit checklist, see these related FinHelp guides:

• Preparing a Document Packet for an IRS Correspondence Audit: https://finhelp.io/glossary/preparing-a-document-packet-for-an-irs-correspondence-audit/
• Preparing for an IRS Office Audit: Checklist: https://finhelp.io/glossary/preparing-for-an-irs-office-audit-checklist/
• How to Organize Supporting Documentation for a Tax Audit: https://finhelp.io/glossary/how-to-organize-supporting-documentation-for-a-tax-audit/

Professional disclaimer: This article is educational and does not constitute individualized tax advice. For specific situations, consult a licensed tax professional (CPA, EA, or tax attorney).

Closing note: Preparation shortens audits. A clear packet, a brief explanatory memo, and professional representation when appropriate turn stressful audits into manageable administrative processes.