Receiving an IRS audit letter can be nerve-wracking—but it doesn’t mean you’re in trouble. In fact, many audits are routine and can be resolved quickly with the right documentation and response. The key is to stay calm, understand the process, and know what steps to take.
In this post, we’ll walk you through exactly what to do if the IRS contacts you about an audit—plus how to protect yourself and when to bring in a professional.
📬 Step 1: Read the Letter Carefully
The IRS will send you a letter by mail (never by phone, email, or text). This letter will tell you:
- Which tax year is under review
- What items on your return are being questioned
- What type of audit is being conducted (more on that below)
- What documents they’re requesting
- How to respond and by when
✅ Action: Do not ignore the letter. Note the response deadline and make a copy for your records.
🔍 Step 2: Understand the Type of Audit
There are three main types of audits:
1. Correspondence Audit
- Conducted entirely by mail
- Usually for a single issue (e.g., a missing document or clarification)
- Most common and least invasive
2. Office Audit
- You’re asked to visit a local IRS office with specific documentation
- More in-depth but still manageable
3. Field Audit
- An IRS agent visits your home, office, or accountant
- Most detailed and thorough audit
- Often reserved for complex or high-value cases
📝 Pro Tip: The majority of audits are correspondence-based and can be resolved with a timely, well-documented response.
📁 Step 3: Gather Your Documentation
Start organizing all documents related to the items in question. This may include:
- Receipts
- Invoices
- Bank statements
- Contracts
- Tax forms (W-2s, 1099s, etc.)
- Mileage logs
- Bookkeeping records
Be honest—don’t create or alter records. If something is missing, let your advisor know so they can guide you.
✅ Pro Tip: Keep tax records for at least three years, or up to seven years if you’ve claimed large losses or deductions.
📤 Step 4: Respond Promptly and Completely
Your audit letter will include instructions on how to respond—by mail or in person. Make sure you:
- Include all requested documents
- Write a brief, respectful explanation if needed
- Make copies of everything you send
- Use certified mail with tracking
❌ Do not send original documents unless specifically asked.
👩💼 Step 5: Consider Professional Representation
Even if the audit seems minor, it’s a good idea to consult with a tax professional—especially if:
- You’re unsure how to respond
- You made an error on your return
- You owe money
- You’re facing an office or field audit
At JTPS Advisory Co., we’ve helped clients:
- Organize and submit audit documentation
- Communicate directly with IRS agents
- Negotiate payment plans or penalty relief
- Minimize the impact of errors or oversights
💡 Bonus: If you used a preparer, ask if they offer audit protection or representation.
🔚 Step 6: Know What Happens Next
Once the IRS receives your response, they will:
- Accept your documentation and close the audit, OR
- Propose changes (you’ll get a 30-day letter to accept or appeal)
You’ll then either:
- Owe additional taxes, interest, or penalties
- Receive a refund, or
- See no changes if all is in order
🛑 If you disagree with the results, you can appeal the decision within 30 days.
🔐 How to Avoid Future Audits
While audits aren’t always avoidable, you can reduce your chances by:
- Filing accurate and complete tax returns
- Keeping detailed and organized records
- Reporting all income—including 1099s and cash
- Being cautious with red-flag deductions (e.g., high meal expenses, home office)
Working with a tax professional gives you a second set of eyes to spot errors before the IRS does.