What to Expect During a Tax Audit: Procedures and Tips

Overview

A tax audit is an official review that looks beyond the numbers on your return to confirm the underlying facts and documentation. In my 15 years advising clients, I’ve seen well-prepared taxpayers move through audits quickly while disorganized taxpayers face delays, additional tax, and sometimes penalties. This guide focuses on the practical steps you’ll see during an audit, what auditors typically look for, and how to prepare to protect your position.

Why audits happen

Audits are triggered for many reasons. The IRS uses automated systems and returns screening; selection can be random, driven by a computer mismatch, or based on identified risk factors. Common triggers include:

• Mismatched or missing income reported to the IRS (W-2s, 1099s).
• Large or unusual deductions relative to income (e.g., high charitable gifts, large business expenses).
• Math errors or missing forms.
• Repeated patterns across multiple years that raise questions.
• Industry- or activity-specific risk markers (cash-heavy businesses, rental loss claims).

The IRS publishes guidance about audit selection and priorities; for additional background see the IRS Audit Examinations page (IRS).

Types of audits and what each looks like

• Correspondence audit: Conducted by mail. You’ll receive a letter asking for specific documents or clarifications. This is the most common, typically the quickest and least invasive.

• Office audit: You meet at an IRS office to present documents and answer questions. Expect more detailed review than in correspondence audits.

• Field audit: The most comprehensive. An IRS agent visits your home or business and may examine multiple years of records.

• Virtual/remote examinations: Since the pandemic, the IRS increasingly accepts secure electronic document delivery and conducts parts of examinations remotely. If this applies, you’ll get instructions for secure upload.

For practical differences and preparation strategies for correspondence vs. field audits, consult our guide on Correspondence vs Field Audits: What to Expect and How to Prepare.

(See also: How to Gather Records for an IRS Audit: A Step-by-Step Guide.)

Typical audit timeline (what to expect step-by-step)

1. Notice and scope: The IRS contacts you by mail—never by phone initially—to notify you. The notice will state which tax year and items are under review, and list documents requested. Keep the notice in your file.

2. Document assembly: Gather the records requested. This commonly includes bank statements, receipts, invoices, bills of sale, canceled checks, and payroll reports.

3. Examination: The agent reviews your documents and may ask clarifying questions. For an office or field audit, you (or your representative) will attend meetings.

4. Proposed changes and response: If the agent finds discrepancies, you’ll receive a report or proposed adjustment. You’ll have an opportunity to respond with additional documents or explanation.

5. Closing: The audit can close with no change, with agreed changes (you sign and accept), or with changes you dispute (you can appeal). The IRS will send a closing letter describing the result and any tax, interest, or penalties owed.

The IRS provides detailed procedural information in Publication 556 and its online resources (IRS).

Documents to gather — a practical checklist

• A copy of the tax return under audit and related years if requested.
• W-2s, 1099s, K-1s, and other income statements.
• Bank statements and canceled checks covering the period in question.
• Receipts and invoices to substantiate deductions and business expenses.
• Mileage logs and calendar entries for business travel and home office use.
• Contracts, canceled invoices, purchase agreements, and leases.
• Payroll records and employment tax filings if you have employees.

If the IRS asks for a document you cannot provide (lost records, destroyed items), prepare an explanation and supporting secondary evidence (ledgers, bank statements, third-party confirmations). See our step-by-step records guide for assembling a documentary packet.

How to interact with the auditor

• Respond in writing and on time. Most IRS notices include a response deadline; missing it can lead to unfavorable default determinations.
• Be factual and concise. Provide documents requested rather than long narratives. Label exhibits and use a simple table of contents.
• Use a representative if you’re uncomfortable: a CPA, enrolled agent, or tax attorney can communicate for you. You can authorize a representative using Form 2848 (Power of Attorney). Our article on The Role of Power of Attorney in Tax Audits and Collection Matters explains when to use this option.
• Keep communications professional and documented. If the auditor requests an interview, treat it like a meeting—be prepared, stick to the facts, and avoid volunteering extra information outside the scope of the inquiry.

Common mistakes to avoid

• Ignoring an audit notice or missing deadlines.
• Providing incomplete or unorganized records — this slows the process and raises suspicions.
• Admitting fault prematurely or providing contradictory statements.
• Using unqualified ‘tax help’ that encourages incorrect positions.
• Failing to consider appeal rights — you have options if you disagree with the outcome.

Strategies that help (real-world insights)

• Organize proof first. In one case I handled for a small business client, a correspondence audit asked for documentation of specific expenses. We submitted a three-tabbed packet (invoices, canceled checks, and bank reconciliations) that let the agent verify the deduction within a single review—no follow-up and no penalty.

• Use contemporaneous records. Mileage logs or dated receipts are far stronger than reconstructed spreadsheets.

• Be realistic about positions that are questionable. Where a claim is weak, calculate the possible tax exposure and consider settlement options rather than prolonged dispute.

• When in doubt, hire a specialist. An enrolled agent or CPA experienced with audits can often shorten the timeline and reduce exposure.

Timelines and statistics

Audit length varies by type and complexity. Correspondence audits can resolve in weeks if documentation is clear; field audits may take several months. According to IRS data and public reporting, correspondence reviews are the majority of individual audits while field audits are less common but more involved (IRS Data Book). Specific case timing depends on response promptness and case complexity.

Appeals and after the audit

If you disagree with the auditor’s findings, you can request a meeting with the auditor’s manager or file an appeal with the IRS Office of Appeals. Appeals must be requested within the timeframe provided in the closing letter. You can also seek relief or assistance from the Taxpayer Advocate Service if the audit causes financial hardship or is delayed unreasonably.

Fees, penalties, and interest

If the audit results in additional tax owed, the IRS typically applies interest and may assess penalties for negligence or fraud if applicable. Penalties depend on the nature of the error; civil fraud carries heavier penalties and requires a higher standard of proof.

Quick preparation checklist (one-page)

• Keep a certified copy of the audited return and notice.
• Assemble requested documents into a labeled packet.
• Make copies of everything you send; do not send originals unless requested.
• Consider representation and file Form 2848 if applicable.
• Respond by the deadline in writing; request extensions only if necessary.
• If audited on electronic records, be ready to provide export files or formatted spreadsheets.

Further reading and resources

• IRS — Audit Examinations: https://www.irs.gov/businesses/small-businesses-self-employed/audit-examinations
• IRS Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund (search via IRS site for the current version).
• Consumer Financial Protection Bureau — consumer guidance on dealing with third-party tax preparers and scams: https://www.consumerfinance.gov/

For targeted guides on preparing records and audit-specific checklists, see our step-by-step post How to Gather Records for an IRS Audit: A Step-by-Step Guide and the comparison piece Correspondence vs Field Audits: What to Expect and How to Prepare. If you expect an in-person meeting, use the Preparing for an IRS Office Audit: Checklist to streamline your documents.

Professional disclaimer

This article is educational and reflects general experience and public guidance as of 2025. It is not personalized tax advice. Consult a qualified tax professional (CPA, enrolled agent, or tax attorney) about your specific situation.