Quick overview

A field audit is the IRS’s most detailed in-person review of your books and records (see IRS audit guidance) (https://www.irs.gov/businesses/small-businesses-self-employed/audits). Below is a practical, prioritized checklist and step‑by‑step guidance to assemble an audit-ready package.

Priority checklist — documents to have on hand

  • Tax returns and supporting schedules for the years under review (including electronic tax preparer worksheets, e-file reports, and amended returns).
  • Bank statements (business and personal) and reconciliations for each year under review.
  • Deposit slips, canceled checks, and credit‑card merchant statements that support reported income and expenses.
  • Sales records or daily receipts, point‑of‑sale reports, and summaries that reconcile to bank deposits.
  • Receipts and invoices for business expenses with clear descriptions and business purpose.
  • Payroll records: Form W‑2s, Form 941/940 reports, payroll registers, timecards, and third‑party payroll confirmations.
  • Independent contractor records and Form 1099s or 1099‑MISC/NEC filings.
  • Contracts, leases, loan agreements, closing statements, and insurance policies.
  • Fixed‑asset lists and depreciation schedules (basis, placed‑in‑service dates, and disposal records).
  • Inventory records and cost of goods sold support (purchase invoices, inventory counts).
  • Mileage logs and travel records with dates, miles, and business purpose.
  • Prior IRS correspondence, notices, and any previous audit reports.
  • Documentation for credits and deductions claimed (charitable receipts, home office calculations, education expenses).
  • Identification and business formation documents (EIN confirmation, articles of organization, licenses).
  • Power of attorney (IRS Form 2848) if you’ll have a representative present.

(For a practical list tailored to office audits, see our guide on preparing a professional binder.)

How to organize documents for a field audit

  1. Build a single, indexed binder or a secure digital folder. Use tabs or digital folders for each document category (Returns, Bank, Receipts, Payroll, Contracts, Assets, Correspondence).
  2. Add a one‑page cover summary that lists the return years, primary issues under review, and contact information for the taxpayer and their representative. In my practice, auditors appreciate a clear index—this often shortens the on‑site time.
  3. Include reconciliations that show how totals on the tax return match bank deposits or accounting reports.
  4. Highlight or post‑it specific transactions the IRS has questioned so the agent can find supporting documents quickly.

See our step‑by‑step binder example: How to Prepare a Professional Binder for an IRS Office Audit (https://finhelp.io/glossary/how-to-prepare-a-professional-binder-for-an-irs-office-audit/).

Document retention and common timeframes

  • Keep records at least 3 years — the usual statute of limitations for audits. Keep 6 years if you omitted more than 25% of gross income, and keep records indefinitely for transactions with no time limit (e.g., property until sold). The IRS recommends keeping records as long as they are needed to support items on your tax return (https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping).

For more on retention best practices, see: Document Retention Best Practices to Survive an Audit (https://finhelp.io/glossary/document-retention-best-practices-to-survive-an-audit/).

If documents are missing or incomplete

  • Be honest and explain what you have and what you do not. The IRS prefers reasonable attempts to reconstruct records (bank statements, third‑party transcripts, invoices). Use IRS transcripts to corroborate income when original documents are unavailable. If needed, your CPA can prepare reasonable reconstructions and statements explaining the method used.

Common audit focus areas

Auditors frequently review: income completeness, business vs. personal expenses, payroll and employment taxes, cost of goods sold, depreciation, and large or unusual deductions. A practical checklist of records the IRS commonly requests is available here: Records the IRS Wants to See During an Audit: A Practical Checklist (https://finhelp.io/glossary/records-the-irs-wants-to-see-during-an-audit-a-practical-checklist/).

Practical tips to reduce friction on site

  • Provide electronic copies on a laptop or tablet where possible; label files clearly. Keep originals accessible if the agent requests to inspect them.
  • Reconcile numbers before the meeting so you can answer basic questions immediately; this reduces follow‑up requests.
  • Limit the scope of on‑site review by offering to deliver larger volumes of documents to the local IRS office or uploading them securely.
  • Consider a tax professional or enrolled agent to attend the audit with you; grant power of attorney if they will communicate on your behalf (Form 2848).

Timeline and expectations

A field audit often involves an initial on‑site visit and then follow‑up correspondence. The total time varies from a few weeks to several months depending on complexity and responsiveness. Maintain clear communication and meet agreed deadlines to avoid default decisions.

Final notes and disclaimer

This article provides educational guidance based on IRS procedures current as of 2025 (IRS audits page and recordkeeping guidance) (https://www.irs.gov/businesses/small-businesses-self-employed/audits; https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping). It is not legal or tax advice. For personalized advice and representation, consult a CPA, enrolled agent, or tax attorney.