What to Do When You Get an IRS Audit Notice — Step by Step

An IRS audit notice in your mailbox triggers immediate anxiety for most taxpayers — even those who filed correctly. The word “audit” conjures images of confrontational IRS agents and years of financial pain. The reality is far less dramatic for the vast majority of people who receive audit notices. Most IRS audits are correspondence audits — conducted entirely by mail, focused on one or two specific items, and resolved without any face-to-face interaction. Understanding exactly what type of audit you received, what it means, and what your specific next steps are transforms a panic-inducing situation into a manageable process with a clear path forward.

Quick Answer: When you receive an IRS audit notice read it carefully to identify the audit type (correspondence, office, or field), what specific items are being questioned, and the response deadline. Never ignore an audit notice. Respond by the deadline with documentation supporting your position. For correspondence audits you can often handle this yourself. For office or field audits professional representation is strongly recommended.

Table of Contents

1. The 3 Types of IRS Audits — What You Actually Have
2. How to Read Your Audit Notice
3. Handling a Correspondence Audit
4. Office and Field Audits — What to Expect
5. When to Get Professional Help
6. What Commonly Triggers Audits
7. Possible Audit Outcomes
8. FAQ
9. Conclusion

The 3 Types of IRS Audits

Correspondence Audit (most common — approximately 75% of all audits): Conducted entirely by mail. The IRS sends a letter requesting documentation for one or two specific items on your return — a charitable deduction, business expense, or income item the IRS wants to verify. You respond by mail with supporting documentation. Most correspondence audits are resolved without any personal contact with an IRS agent. This is the audit most people who receive notices actually have.

Office Audit: You are asked to appear at a local IRS office with your records. More comprehensive than correspondence audits but still focused on specific issues identified in your return. An IRS tax examiner reviews your documentation in person. Professional representation is advisable for office audits.

Field Audit (least common, most serious): An IRS Revenue Agent comes to your home or business to review your records. Field audits are comprehensive examinations of your entire return — typically reserved for complex returns, self-employed individuals with high income, or cases where the IRS has reason to believe significant unreported income exists. Professional representation is essential for field audits.

How to Read Your Audit Notice

Before taking any action read the notice carefully from beginning to end. The notice contains everything you need to understand what is happening and what is expected of you.

What to identify in the notice:

• The notice number: Found in the upper right corner. CP2000 notices address unreported income. CP75 notices are for examination of specific items. Letter 2202 or 2205 typically indicates an office or field audit. Knowing the notice type tells you what category of audit you are dealing with.
• The specific issue: The notice will identify exactly what item or items the IRS is questioning — a specific deduction, income discrepancy, or credit claimed.
• The response deadline: You will have a specific number of days — typically 30-60 days — to respond. Mark this date immediately.
• What to send: The notice typically specifies what documentation or information the IRS wants to see.
• The proposed tax change: Many notices include a proposed additional tax amount — this is what the IRS thinks you owe if the item in question is disallowed.

Do not panic at the proposed amount: A CP2000 showing a proposed additional tax of $3,000 does not mean you owe $3,000. It means the IRS is proposing that amount based on an income discrepancy — which you may be able to explain or document to eliminate or reduce entirely.

Handling a Correspondence Audit Yourself

Correspondence audits are manageable for most taxpayers without professional help — particularly when the issue is straightforward and you have supporting documentation.

Step 1 — Gather documentation for the questioned item: If the IRS is questioning a charitable deduction gather your donation receipts and acknowledgment letters. If they are questioning business expenses gather receipts, bank statements, and business purpose documentation. If they are questioning unreported income gather documentation showing why the income was not taxable or was already reported.

Step 2 — Write a clear response letter: Address each item the IRS raised specifically. For each questioned item state your position clearly — “The charitable deduction of $X is supported by the enclosed acknowledgment letter from [Organization]” — and reference the enclosed documentation.

Step 3 — Send by certified mail with return receipt: This creates a paper trail proving your response was sent and received before the deadline. Keep copies of everything you send.

Step 4 — Follow up if no response in 60 days: If you do not receive a response within 60 days of your documented submission call the number on the notice to verify receipt and status.

What if you agree with the proposed change: If the IRS is correct and you do owe additional tax the notice provides instructions for agreeing to the assessment and paying. Agreeing and paying promptly reduces additional interest accumulation.

Office and Field Audits — What to Expect

Office and field audits are significantly more comprehensive and consequential than correspondence audits. Understanding what to expect reduces anxiety and enables better preparation.

For an office audit:

• You will receive a letter specifying the date, time, and location of the appointment
• The letter will list what records and documents to bring
• The IRS examiner will review your documentation and ask questions
• You can request a postponement to allow more time to prepare
• You have the right to have a representative present — an enrolled agent, CPA, or tax attorney

For a field audit:

• A Revenue Agent will contact you to schedule the examination
• You can request the audit be conducted at your representative’s office rather than your home or business
• The examination can be broad — covering your entire return not just specific items
• Field audits can take weeks or months to complete
• Professional representation is not just advisable — it is strongly recommended

Critical rule for both: Answer only what is asked. Do not volunteer information beyond what the IRS specifically requests. Everything you say can expand the scope of the audit. This is the most important behavioral guideline for in-person audits.

When to Get Professional Help

Not every audit requires professional representation. Here is a framework for deciding:

Handle yourself: Correspondence audit over a simple, well-documented item — a charitable deduction with receipts, a 1099 you reported but the IRS did not see. You have all documentation. The proposed amount is small. The issue is factual and easily explained.

Get professional help: Any office or field audit. Correspondence audit involving complex business expenses, home office deductions, or rental income. Any audit where significant tax is proposed. Any audit where your records are incomplete. Any indication of fraud or substantial underreporting. Any audit involving multiple years.

Who to hire: Enrolled Agents specialize in IRS representation and are often the most cost-effective choice. CPAs with audit experience are appropriate for complex situations. Tax attorneys are warranted when fraud is possible or when significant amounts are at stake.

What Commonly Triggers Audits

Understanding audit triggers helps you prepare documentation for future returns and understand why you may have been selected.

• Income discrepancies: Income reported by a payer to the IRS that does not appear on your return — the most common correspondence audit trigger
• High deductions relative to income: Charitable deductions, business expenses, or other deductions that are unusually high relative to your reported income
• Self-employment income: Schedule C filers with cash-intensive businesses have higher audit rates
• Large cash transactions: Currency transaction reports filed by banks for cash deposits over $10,000
• Home office deductions: Particularly for employees claiming home office before the rules became stricter
• Random selection: A percentage of returns are selected for audit through statistical random selection regardless of content
• Related party examinations: If someone you do business with is audited their records may reference your return

Possible Audit Outcomes

No change: The IRS accepts your documentation and your return as filed. No additional tax owed. This is the outcome for many taxpayers who respond properly to correspondence audits with complete documentation.

Agreed change: The IRS proposes an additional tax and you agree it is correct. You pay the tax plus interest. Penalties may be abated for first-time compliance issues.

Disagreed change: The IRS proposes additional tax and you disagree. You can appeal through the IRS Office of Appeals — an independent function within the IRS — before paying anything. The Appeals process resolves approximately 80% of disputed audit cases without going to tax court.

Tax Court: If Appeals does not resolve the dispute you can petition the Tax Court to have an independent judge review the case. For smaller amounts the Small Tax Case procedure (under $50,000 per year) is simpler and less expensive.

Frequently Asked Questions

How long does an IRS audit take?

Correspondence audits typically resolve in 3-6 months from when you respond. Office audits typically take 3-6 months from the initial appointment. Field audits can take 6 months to over a year depending on complexity. The IRS audit statute of limitations is generally 3 years from the return due date — meaning they typically must initiate an audit within 3 years of when you filed. This extends to 6 years when income is substantially underreported and has no time limit in cases of fraud.

Can an audit result in criminal charges?

Civil audits — the vast majority — result in additional tax, penalties, and interest assessments. Criminal charges are reserved for intentional tax fraud — deliberate falsification of records, systematic concealment of income, or willful failure to file. An honest mistake on a return is a civil matter not a criminal one. If an IRS Criminal Investigation Division agent contacts you rather than a regular examiner consult a tax attorney immediately.

What should I not do when I receive an audit notice?

Do not ignore it — missing the response deadline allows the IRS to assess the proposed tax automatically. Do not call the IRS without being prepared — have your return and all relevant documents in front of you first. Do not send original documents — send copies and keep originals. Do not agree to an expanded scope or additional years without consulting a professional. Do not make representations about items not included in the notice — stick to what was asked.

Conclusion

An IRS audit notice is serious but manageable — especially when you respond correctly and promptly. Read the notice carefully to identify the type, the specific issue, and the deadline. For correspondence audits gather your documentation, write a clear response, and send by certified mail before the deadline. For office and field audits professional representation is the right investment. The IRS audit process has defined steps and multiple appeal opportunities — ignoring the notice or panicking are the two responses that consistently produce the worst outcomes. Engage with the process, respond with documentation, and use the appeal rights available to you if you disagree with the result.