Receive an Audit Notice? Tips for Understanding What is Ahead

tax auditTax audits happen. If you receive a notice of tax audit, information about the process can reduce anxiety and help you prepare to respond to the Internal Revenue Service (IRS).


Part of the business of the IRS is to conduct civil audits and criminal tax audits if evidence suggests involvement in a tax crime. In 2022, the IRS reports it closed 708,309 audits of tax returns which led to recommendations of an additional $30.2 billion in taxes. You could be audited for an error or question on your tax return, or your return may be pulled due to an internal IRS algorithm.


Make note of the type of notice you received; it may be an Underreporter notice or CP2000. The IRS has a prodigious wealth of information collected through its automated Underreporter program. This type of notice usually informs you of a mismatch between the information you provided on your return and the information the IRS has already gathered regarding your income. This process is fairly straightforward—you can agree to the proposed tax change or disagree by following the process outlined in the notice.


The IRS currently conducts audits via correspondence through the mail, or in-person at an IRS office (office audit) or at your home or place of business (field audit). Whether your audit is conducted via correspondence or in-person, it is important to understand what documents the IRS is requesting and to review your materials carefully before producing them.


The IRS may request a number of different materials, including legal and financial documents, loan agreements, receipts of all kinds, travel expenses and tickets, and more. If you have a complex financial, business, or asset picture, working with a tax attorney experienced with IRS audits is a good idea. Your attorney can review the documents requested by the IRS to better understand how to respond to the IRS without putting yourself in jeopardy. You may be able to submit documents electronically through document upload to the IRS.


For correspondence audits, be sure to use a delivery mode that includes tracking, in order to prove your documents were submitted in a timely way.


While most IRS audits are of returns filed in the prior two years, the IRS might look back three years also. If a significant error, or other concern, is revealed in those records, the agency can look back further.


An IRS audit opens a door to your financial picture—and how you reported it. If you feel there is reason for concern, and you received a letter from the IRS initiating an audit, reach out to a tax attorney to discuss your concerns and best options.


Audit letter arrive in the mail? Speak with our legal team

With offices in Chicago and Cleveland, the legal team at Robert J. Fedor, Esq., LLC provides strong representation with IRS audits, tax controversy, or other IRS investigation. Call 800-579-0997 or contact us online today.


Download Surviving  IRS Tax Audit eBook