Quick overview

An IRS examination is rarely punitive if you can substantiate what’s on your return. In my 15+ years as a CPA handling examinations, the cases that resolve quickly are the ones where the taxpayer shows up with a clear, organized packet of primary records. This article gives a practical, itemized checklist and step‑by‑step guidance for individuals, self‑employed taxpayers, and small businesses, plus strategies for missing or partial records.

Who will ask for what

  • Correspondence audits (letters) usually request a small set of items—often W‑2s, 1099s, or receipt copies. Respond by mail or through the IRS portal as instructed. See the IRS guidance on responding to notices: https://www.irs.gov/individuals/understanding-your-irs-notice
  • Office audits ask you to bring documents to an IRS office. Expect to present originals and organized copies.
  • Field audits occur at your home or business; the examiner may request access to on‑site records and interview owners or staff. For an overview of the examination process, consult IRS Publication 556: https://www.irs.gov/pub/irs-pdf/p556.pdf

Core documents every taxpayer should bring

These are the baseline items that apply to most audits:

  • The complete copy of the tax return under examination (signed, if applicable). Include all schedules and supporting worksheets.
  • Identification: government photo ID for any person attending (driver’s license, passport).
  • W‑2s, 1099‑MISC/NEC, 1099‑INT, 1099‑DIV, 1099‑B, SSA‑1099, K‑1s — any third‑party income statements that match the return.
  • Bank statements for the tax year(s) under review (all pages).
  • Canceled checks or electronic payment confirmations that support payments or expenses.
  • Invoices, receipts, and bills supporting deductions or business expenses; group receipts by category and date.
  • Business books and records: general ledger, profit & loss, balance sheet, cash receipts journal, and bank reconciliation reports.
  • Contracts, leases, and closing statements (e.g., Form HUD‑1 or settlement statements for real estate transactions).
  • Payroll records if employees are involved: Forms 941, W‑2 summaries, payroll journals, and state filings.
  • Vehicle records for mileage and business use: mileage logs, maintenance receipts, and a written policy showing business vs personal use.
  • Time logs or appointment books when claiming labor hours for contract work or home office allocation.

Additional documents by situation

Individuals

  • Charitable contributions: bank records, written acknowledgements from charities (required for donations over $250), and appraisals for noncash gifts.
  • Medical expenses: detailed statements from providers and proof of payment.
  • Mortgage interest: Form 1098 and the HUD/closing statement for the year of purchase.
  • Investment transactions: brokerage statements, trade confirmations, and cost basis worksheets.

Self‑employed and small business

  • Sales receipts, daily deposit summaries, and point‑of‑sale reports.
  • Expense documentation: vendor invoices, credit card statements, and receipts tied to business categories.
  • Inventory records: purchase invoices, inventory counts, and valuation methods (FIFO/LIFO) documentation.
  • Home office: floor plan, square footage calculations for business vs personal space, and utility bills if allocating utilities.
  • Business travel: itineraries, lodging receipts, conference registrations, and detailed meal logs showing business purpose.

Rental property

  • Leases, tenant ledgers, rent receipts, repair invoices, and depreciation schedules.

Special items

  • Casualty/theft: insurance claims, police reports, repair estimates, and loss calculations.
  • Employee benefit plans: plan documents, Form 5500 (if required), and contribution records.

How to assemble an auditor‑friendly packet

  1. Make a cover sheet for each topic (Income, Deductions, Credits, Assets) with a one‑page summary of your position and totals. Brief summaries save time and build credibility.
  2. Place originals in a secure binder and provide the auditor with numbered copies. Keep originals with you unless the IRS specifically requests to hold them.
  3. Use tabs and a table of contents that maps the requested line items on the return to the documents you’ve supplied.
  4. Highlight or flag key pages (e.g., line totals, dates) and include cross‑references to your ledger or bank statement.
  5. For electronic submissions, create a logical folder structure (Year > Topic) and name files clearly (e.g., 2023BankAccountXStatement_03.pdf).

For an example packet format and templates, see FinHelp’s guide on preparing an audit packet: Preparing an Audit Packet: What to Send to an IRS Auditor (https://finhelp.io/glossary/preparing-an-audit-packet-what-to-send-to-an-irs-auditor/).

What to do if you don’t have a requested document

  • Retrieve duplicates from third parties: banks, brokers, employers, and vendors can reissue statements or confirmations—start these requests immediately.
  • Use substitute evidence: credit card statements, deposit slips, vendor affidavits, or ledgers that show consistent business practice.
  • Provide a written explanation and, where possible, corroboration from third parties (e.g., a supplier invoice plus bank payment trace).
  • If records are permanently lost (disaster, theft), document the loss (insurance claim, police report) and reconstruct amounts conservatively.

The IRS accepts reconstructed records when they are reasonable and consistent with other evidence (see IRS Publication 538 on accounting periods and methods for reconstruction concepts). When reconstruction is needed, work with a tax professional to ensure credibility.

Virtual and portal submissions

The IRS increasingly accepts digital documentation via secure mail and its online portals. When sending files:

  • Use searchable PDF where possible (OCR) and name files clearly.
  • Keep originals until the case closes.
  • Track everything you upload or mail and obtain delivery confirmations.

FinHelp’s virtual audit guidance can help if you expect to send documents electronically: What to Expect During a Virtual Tax Audit: Remote Documentation Tips (https://finhelp.io/glossary/what-to-expect-during-a-virtual-tax-audit-remote-documentation-tips/).

Representation and power of attorney

If you prefer a tax professional to handle communications and the meeting, file Form 2848 (Power of Attorney and Declaration of Representative) so your representative can speak and receive records on your behalf: https://www.irs.gov/forms-pubs/about-form-2848. A qualified CPA, enrolled agent, or tax attorney can prepare your audit packet, negotiate exam findings, and represent you before the IRS.

If an issue escalates beyond the examiner, the IRS Office of Appeals provides an independent review. Consider appeals if you disagree with proposed adjustments—FinHelp’s guide on appeals offers practical steps: When to Escalate an Audit Dispute to the IRS Office of Appeals (https://finhelp.io/glossary/when-to-escalate-an-audit-dispute-to-the-irs-office-of-appeals/).

Day‑of examination tips

  • Bring originals and organized copies; the auditor will often take copies and return the same day.
  • Remain calm, courteous, and fact‑based. Avoid volunteering unrelated explanations.
  • Ask clarifying questions about what the examiner needs and confirm deadlines in writing.
  • Take notes, including the examiner’s name, badge number, and the time and place of the meeting.

Timeline and likely outcomes

Simple correspondence audits can be resolved in weeks. Office and field audits may take months depending on complexity and the need for third‑party verification. Possible outcomes include no change, agreement with adjustments (with or without penalties), or referral to Appeals. Understand your rights—see IRS Publication 1, Taxpayer Bill of Rights: https://www.irs.gov/pub/irs-pdf/p1.pdf

Common mistakes to avoid

  • Showing up with unorganized stacks of papers—auditors respond better to concise, mapped evidence.
  • Providing inconsistent explanations across documents.
  • Destroying or surrendering originals without copies or a written receipt.
  • Waiting until the last minute to contact banks, brokers, or vendors for duplicate records.

Final professional checklist (bring all that apply)

  • Tax return(s) under audit and related schedules
  • Photo ID
  • W‑2s, 1099s, K‑1s
  • Bank statements and cancelled checks
  • Sales records, invoices, receipts
  • Payroll records (941s, payroll journal)
  • Contracts, leases, closing statements
  • Depreciation schedules, inventory records
  • Vehicle logs and travel records
  • Charitable acknowledgements and appraisals
  • Power of Attorney (Form 2848) if represented

Closing notes and disclaimer

This guide draws on practical audit experience to help you prepare an evidence‑based packet that reduces delays and improves your position. It is educational and not a substitute for personalized tax advice. For help constructing an audit packet, reconstructing missing records, or representation before the IRS, consult a qualified CPA, enrolled agent, or tax attorney.

Authoritative sources cited in this article include IRS Publication 556 (Examinations), the IRS page on understanding notices, and Form 2848 guidance. For IRS resources see: https://www.irs.gov/ (search “examination”), https://www.irs.gov/individuals/understanding-your-irs-notice, and https://www.irs.gov/pub/irs-pdf/p556.pdf

Internal resources: Preparing an Audit Packet: What to Send to an IRS Auditor (https://finhelp.io/glossary/preparing-an-audit-packet-what-to-send-to-an-irs-auditor/), Preparing for an IRS Income Tax Audit: Documents to Gather (https://finhelp.io/glossary/preparing-for-an-irs-income-tax-audit-documents-to-gather/), What to Expect During a Virtual Tax Audit: Remote Documentation Tips (https://finhelp.io/glossary/what-to-expect-during-a-virtual-tax-audit-remote-documentation-tips/).

Professional disclaimer: This content is for educational purposes and does not create a client relationship. Contact a tax professional for case‑specific advice.