IRS Audit Guide

If you receive an IRS audit notice, print this checklist out as a guide to help you through the process.

Tax Return, Tax Preparer and Tax Records

  1. Carefully read the IRS Audit Notice and locate the list of items the IRS intends to examine
  2. Locate your copy of the tax return for the year that has been selected for Audit
  3. If had a tax preparer prepare your return, call and tell him or her that your return has been selected for audit
  4. Ask for a meeting with the tax preparer to discuss the return and how he or she arrived at the entries on the return
  5. Ask the tax preparer if he will assist you during the Audit (some tax preparers will do this without charge)
  6. Locate all of your records and receipts pertaining to the year under Audit and separate them by category of income and deduction In

Initial Interaction with the IRS Auditor

  1. If you are confident that you have all of your receipts and records and your tax preparer has agreed to assist you in process, it is time to arrange an initial meeting with the Auditor
  2. If you are unsure about the completeness or quality of your supporting documents and records and/or your tax preparer is not willing to defend his preparation of the return, immediately contact a CPA or tax lawyer and arrange a meeting with him or her to discuss areas of exposure and general audit strategy
  3. Have your tax preparer or tax lawyer/CPA contact the IRS auditor and arrange a time and place for the intial audit meeting
  4. If your records are in order and support the income and deductions shown on your return (especially the specific items listed in the Audit notice), your tax preparer or representative should present them to the auditor at the first meeting

  5. If your records are incomplete and/or you are concerned about their quality, your representative should be prepared to answer the basic intial meeting questions and ask for additional time to locate, organize and provide detailed records.

The Examination of Records

  1. Your representative should be present when the IRS auditor reviews your supporting documentation in case clarification is needed or any questions arise.
  2. Your representative should assertively represent your interests but at all times be respectful of the audit process.
  3. It is important not to appear defensive during the audit process because that will make the auditor think you have something to hide. He or she might then expand the audit to additional tax return items and tax years
  4. Respond promptly and thoroughly to all written requests made for additional information or supporting documentation. If you cannot provide the documents requested by the deadline stated in the written request, have your representative contact the auditor and ask for additional time.

  5. If you lack records to support a particular deduction, ask the auditor what types of alternative documentation would he or she accept

The Notice of Income Tax Examination Changes

  1. At some point in the audit process the auditor will issue a Notice of Proposed Income Tax Examination Changes. This is the first time in the process that the auditor will make a committment to the adjustments he or she is proposing
  2. Carefully examine the Notice of Proposed Income Tax Examination Changes with your tax representative noting any computational errors, wrongful assessments of penalties or wrongful adjustments
  3. If, after reviewing the Notice, you and your representative decide that you will agree to the changes, sign the Notice and return it to the auditor. The audit is complete. Within 4 to 6 weeks you will receive an IRS notice requesting payment of the tax, interest and penalties shown due on the report.
  4. If you disagree with the Notice, your representative should call the auditor and explain which adjustments are incorrect. If the auditor does not agree, a meeting with his or her supervisor or group manager should be requested
  5. If an agreement cannot be reached after discussing the case with the group manager, a Notice of Deficiency will be issued. The audit is complete. You have 30 days to file a written protest of the Notice and 90 days to file a United States’ Tax Court Petition disputing the adjustments.