Quick overview

Taxpayers face three primary IRS audit formats: correspondence (mail), office (in-person at an IRS facility), and field (on-site at your home or place of business). Each differs in scope, documentation required, expected timeline, and the level of intrusion. Understanding the differences and your rights helps you respond efficiently and avoid unnecessary escalation.

How the three audit types differ

  • Correspondence audits: The IRS sends a letter (often a CP or L series notice) asking for specific documents to clarify items on your return. These are the most common and least invasive. Typical requests include additional income documents, proof of deductions, or corrected 1099/W-2 forms.
  • Office audits: Conducted at a local IRS office, these are face-to-face meetings with an examiner. They usually cover more than a correspondence audit but are narrower than field audits. Examiners will request original records and may ask clarifying questions in person.
  • Field audits: The most comprehensive. An IRS agent visits your residence or business and may inspect records, interview you or staff, and review operations. Field audits are usually reserved for complex returns, businesses, or situations where the IRS needs to observe how transactions are documented.

(Authoritative source: IRS Audit overview and Publication 556 explain audit types and taxpayer rights: https://www.irs.gov/businesses/small-businesses-self-employed/audits and https://www.irs.gov/pub/irs-pdf/p556.pdf.)

Typical selection triggers and risk factors

The IRS selects returns for audit by a mix of automated filters, document matching, and manual selection. Common triggers include:

  • Mismatched or missing information on W-2s, 1099s, and other third‑party documents
  • Large or unusual deductions relative to income (e.g., high charitable giving, home office claims)
  • Business returns with cash‑intensive operations or poorly documented expenses
  • Random statistical selection or initiatives targeting specific industries or transactions

In my practice over 15 years, I’ve seen returns with routine itemized deductions selected because of a single mismatched 1099. Selection does not imply guilt; it starts a verification process.

What to expect and timelines

  • Correspondence audit: Expect a notice asking for specific documents. Most letters ask for materials within 30 days, though you can request an extension in writing if you need time to gather records. Response and resolution often take weeks to a few months depending on the complexity and IRS workload.
  • Office audit: You’ll be given a date to appear at an IRS office. Bring originals and organized copies of requested documents. Office audits commonly resolve in one or several meetings; total duration can range from weeks to a few months.
  • Field audit: These are scheduled in advance and can last days to weeks. Agents may request an initial document packet, then perform on-site review. Expect a formal report at the end and potential proposed adjustments.

Always read the letter carefully; it will state the form and year under review, what documents are requested, and a contact name or phone number.

Preparing for each audit type — step-by-step

1) Correspondence audit preparation

  • Read the notice carefully and note the deadline.
  • Gather only the specific documents requested (e.g., 1099s, receipts, canceled checks). Do not volunteer extra information unless it directly supports the item.
  • Create a one-page cover letter that lists the documents you’re sending and explains briefly but clearly how the documents support the return.
  • Send copies, not originals, via certified mail or use the IRS portal if the notice provides one. Keep proof of delivery.

See our detailed checklist: Preparing for an IRS Income Tax Audit: Documents to Gather for common document types and organization tips: https://finhelp.io/glossary/preparing-for-an-irs-income-tax-audit-documents-to-gather/.

2) Office audit preparation

  • Organize original records and make legible copies for the agent.
  • Prepare a concise summary or reconciliation of amounts (for example, mileage logs tied to vehicle expenses) so the examiner can follow your logic quickly.
  • Decide who will attend. You can bring a tax professional (CPA, EA, or attorney). If you attend alone, stick to the facts and avoid volunteered commentary.
  • Practice clear, factual answers. If you don’t know, say so and offer to get the documentation.

3) Field audit preparation

  • Expect the agent to review a broader set of information: bank statements, ledgers, payroll records, inventories, and operational documents.
  • Prepare a workspace and supply electronic copies where possible. Consider a pre-packaged audit packet—an organized set of documents keyed to the issues being examined.
  • For businesses, brief employees who may be interviewed and designate who is authorized to speak to the auditor.

For a day-of checklist specific to field audits, our guide is practical: Preparing for an IRS Field Audit: Day-of Checklist: https://finhelp.io/glossary/preparing-for-an-irs-field-audit-day-of-checklist/.

Rights, representation, and appeals

You have multiple taxpayer rights during the audit process, including the right to representation, privacy, and appeal. You can be represented by a CPA, enrolled agent, or attorney at any point (see IRS Publication 1 and Publication 5 for taxpayer rights and representation rules).

If you disagree with the auditor’s findings, you can:

  • Request an internal review or meet with the auditor’s manager
  • Use the IRS appeals process, which provides an independent review of the case (IRS Independent Office of Appeals: current procedures are outlined on the IRS website)
  • Take the case to U.S. Tax Court if required

Our article about using the appeals process explains options and timing: How to Use the IRS Appeals Process to Resolve Audit Disputes: https://finhelp.io/glossary/how-to-use-the-irs-appeals-process-to-resolve-audit-disputes/.

Common mistakes to avoid

  • Over‑sharing: Don’t send records beyond what’s requested unless you clearly link them to the issue. Extra documents can create new lines of inquiry.
  • Poor organization: Auditors expect documentation to support specific entries. Disorganized files slow resolution and weaken your position.
  • Ignoring deadlines: Failing to respond can lead to default assessments and loss of appeal rights.
  • Not using representation for complex matters: For complex business audits or potential fraud issues, professional representation reduces risk and improves outcomes.

Potential outcomes and next steps

  • No change: The IRS accepts your documentation and closes the case. No penalty or tax assessed.
  • Agreed changes: You accept proposed adjustments and pay additional tax, interest, or penalties if applicable.
  • Unagreed changes: You disagree and appeal. During appeal, you can present additional facts and legal arguments.
  • Criminal referral: Rare and reserved for willful fraud or significant evasion; this is exceptional and handled by IRS Criminal Investigation.

Be aware of the statute of limitations: generally, the IRS has three years from the filing date to assess additional tax. That window extends to six years for substantial omissions (more than 25% of gross income) and has no limit for fraud or false returns.

Practical tips from practice

In my experience representing clients, the single most effective step is preparation before filing: maintain clear, contemporaneous records and reconcile third‑party statements with your returns. If audited, respond quickly, stay organized, and use a short cover memo to explain the documents you submit. That approach often converts audits into quick correspondence resolutions rather than lengthy field examinations.

Final considerations and resources

This guide provides general education about audit types and practical preparation strategies. For tailored advice, consult a qualified tax professional familiar with your facts. Authoritative IRS resources include Publication 556 (Examination of Returns, Appeal Rights, and Claims for Refund) and the IRS audits overview page for small businesses and individuals: https://www.irs.gov/businesses/small-businesses-self-employed/audits and https://www.irs.gov/pub/irs-pdf/p556.pdf.

More practical internal resources on FinHelp: “Responding to an IRS Correspondence Audit Notice” and “Preparing an Audit Packet: What to Send to an IRS Auditor” offer step‑by‑step templates and sample cover letters to use when you reply: https://finhelp.io/glossary/responding-to-an-irs-correspondence-audit-notice/ and https://finhelp.io/glossary/preparing-an-audit-packet-what-to-send-to-an-irs-auditor/.

Professional disclaimer: This article is for educational purposes only and is not personalized tax advice. Contact a qualified tax advisor or attorney to discuss your specific circumstances and representation options.