What should you do if you receive an IRS audit notice?

Start with the notice itself.

It tells us which tax year the IRS is looking at, which items are being questioned, and what kind of examination this is. Most audits are not examinations of every line on the return. The scope on that letter matters.

Bring me the notice and the return for the year involved. Before we respond, I want to know exactly what the IRS is asking for, what records support the return, and what the IRS already has.

That is where I start.

One thing to know before anything else

The IRS starts an audit by mail. It does not start one by phone. If someone calls saying you are being audited and demands payment or personal information, that is not the IRS.

What kind of IRS audit is it?

  • Correspondence audits happen by mail and usually focus on specific items or documentation. Most audits are this kind.
  • Office audits are an examination conducted through an IRS office.
  • Field audits are the most involved. They can take place at your business, your home, or your representative’s office.

With a power of attorney, I communicate with the IRS and handle much of the examination on your behalf. For a field audit, that can mean the examination happens through my office rather than yours.

The IRS examines records, not kitchens.

Joshua A. Webskowski, EA, USTCP, tax resolution practitioner in Rockford, Minnesota

What can the IRS examine?

Generally, returns filed within the last three years. When a substantial error is identified the IRS can add years, though it usually does not go back more than six.

The more important question is scope. If the IRS is questioning a particular deduction, an item of income, or a business activity, I want our response to address that issue completely and accurately, and not one inch wider than what was asked.

That sounds simple. In practice it is one of the most important parts of handling an audit properly.

What records will the IRS want?

That depends on what is being examined. An audit is fundamentally about substantiation. Receipts, bank records, business records, contracts, mileage logs, income records.

Missing records do not decide an audit. Records can often be reconstructed from bank statements, third parties, accounting systems, and the IRS’s own transcripts.

Before anything goes to the IRS, I want to know how each document fits the issue being examined.

Do you have to meet with the IRS yourself?

Generally, no. Once I am authorized, the examination runs through me. There are situations where your participation is still needed, but representation sharply reduces how much direct contact you have with the IRS.

For many clients that is the practical reason they hire me. They keep running their business while I deal with the examiner.

How can an IRS audit end?

  • No change. You substantiated the items under review and nothing moves.
  • Agreed. The IRS proposes changes and you accept them.
  • Disagreed. The IRS proposes changes and you do not.

Disagreed is not the end of the case. Depending on where the matter stands, it can go to IRS management, to the IRS Independent Office of Appeals, and ultimately to the United States Tax Court.

That last step matters here. When a qualifying case moves beyond the examination level, you are not starting over with someone who has never seen it.

How I handle an IRS audit

My first job is not to predict how the audit turns out. It is to understand the return, the notice, the records, and the issue.

  1. Get authorized. We file a power of attorney so the IRS communicates with me, on your behalf.
  2. Read the notice and the return. We pin down the years involved and exactly what is being questioned.
  3. Read the account. We pull the IRS records, including the internal transcripts most taxpayers never see, so we know what the IRS already has before we hand over anything.
  4. Build the response. Organized, documented, and no wider than the question asked.
  5. Manage the examination. Communications, document requests, deadlines, and the conversation with the examiner run through my office.
  6. Protect the appeal. If the proposed outcome is not supported by the facts or the law, we take it to Appeals, and to Tax Court when a qualifying case calls for it.

I have been writing about IRS audits for years

Audit representation is not a subject I recently added to a website.

Years ago, drawing on experience I had already built representing taxpayers in examinations, collections, and Appeals, I wrote IRS Secrets Revealed: How to Survive IRS Audit, Collections & Appeals. It covers how returns are selected, correspondence and office audits, organizing your documents, the face-to-face audit and the specific interview techniques the IRS uses, the audit report, Appeals, and the Tax Court process. The appendices walk through actual IRS audit and collection letters, including the notices that carry appeal rights.

My work has kept growing since then, including admission to practice before the United States Tax Court as a non-attorney practitioner. I later wrote How to Get Out of IRS Problems, a broader look at IRS notices, collection matters, penalties, liens, levies, and resolution options.

Complimentary PDF copies of both books are available through BestTaxPro™.

Why work with BestTaxPro™?

You work directly with Joshua A. Webskowski, EA, USTCP.

Josh has worked in taxation since 2003, more than 20 years. He is an Enrolled Agent, a Fellow of the National Tax Practice Institute, an author on IRS representation and resolution issues, and one of the few non-attorneys admitted to practice before the U.S. Tax Court.

He has represented taxpayers in IRS examinations, collection matters, and Appeals since long before he wrote about them.

When you call, you reach a real tax professional. Not a sales center that hands your file to someone else after you sign.

Frequently asked questions

Received an IRS audit notice?

Bring us the notice and the return for the year being examined. We will review what the IRS is asking, what records exist, and where the examination stands.

Call BestTaxPro™ at 763-335-1665 or schedule a 15-minute consultation online. Based in Minnesota, helping taxpayers nationwide. In-person and online Zoom meetings are available.

Do not enter Social Security numbers, dates of birth, or account numbers in this form. Sensitive documents are shared only after engagement, through our secure client portal.

General information only, not tax or legal advice. Individual situations vary.

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