Received an IRS Audit Notice? Here's Exactly What to Do
Don't panic. Follow these steps immediately after receiving an IRS audit letter. Professional representation can save thousands.
This article is provided for general informational purposes by Eugene Solutions LLC. For personalized tax advice specific to your situation, please schedule a consultation with one of our licensed tax professionals.
In This Article
Don't Panic — Here's What an IRS Audit Actually Means
Receiving an IRS audit notice can feel terrifying, but most audits are routine verifications — not criminal investigations. The IRS audits approximately 0.4% of individual returns each year, and the vast majority are correspondence audits handled entirely by mail. There are three types of IRS audits: Correspondence Audits (the most common) are conducted by mail — the IRS requests specific documentation to verify items on your return. Office Audits require you to visit an IRS office with your records. Field Audits are the most comprehensive, where an IRS agent visits your home or business. Regardless of type, you have rights under the Taxpayer Bill of Rights, and you can have professional representation at every stage.
Step 1: Read the Notice Carefully
The first thing to do is read the notice thoroughly. Identify the type of audit, what tax year is involved, which specific items are being questioned, and the deadline to respond. The IRS notice will include a phone number and the name of the examining agent. Do not call the IRS immediately — instead, contact a qualified tax professional first. Note the response deadline (usually 30 days). Do not ignore the notice — failing to respond will result in the IRS making changes to your return unilaterally, which almost always increases your tax bill.
Step 2: Gather Your Documentation
The IRS will specify exactly what they need — typically receipts, bank statements, invoices, mileage logs, or proof of income. Organize everything by category and make copies (never send originals). Key documents often requested include: W-2s and 1099s, bank and brokerage statements, receipts for charitable donations, home office measurements and expenses, vehicle mileage logs, child care provider information (name, address, EIN), and educational expense records. If you can't find a receipt, bank and credit card statements can serve as secondary evidence. Eugene Solutions maintains organized client files specifically for audit preparedness.
Step 3: Get Professional Representation
You have the right to have a qualified representative handle your audit. Enrolled Agents (EAs), CPAs, and tax attorneys can represent you before the IRS under Power of Attorney (Form 2848). A qualified representative communicates directly with the IRS on your behalf, can attend audit meetings so you don't have to, knows what information to provide (and what not to volunteer), can negotiate penalties and settlements, and can appeal unfavorable decisions. Eugene Solutions provides full IRS audit representation — we've successfully resolved hundreds of audits and saved our clients thousands in penalties and additional assessments.
Step 4: Respond Within the Deadline
Always respond by the deadline stated in the notice. If you need more time, request an extension in writing before the deadline expires. When responding to a correspondence audit, send your documents via certified mail with return receipt requested so you have proof of timely response. Include the notice number, your SSN, the tax year in question, and a clear cover letter referencing each item. Do not include extra documentation that wasn't requested — volunteering additional information can open new lines of inquiry.
What Happens After the Audit
After reviewing your documentation, the IRS will issue one of three outcomes: No Change — the IRS agrees with your return as filed. Agreed — changes are proposed and you agree with them; you sign the agreement and pay any additional tax. Disagreed — you don't agree with the proposed changes and can request a conference with an IRS manager or file a formal appeal with the IRS Office of Appeals. If the amount in question exceeds $25,000, you may petition the U.S. Tax Court. You generally have 30 days to appeal an unfavorable decision. Eugene Solutions handles the entire appeal process for our clients.
How to Reduce Your Audit Risk
While audits can't always be avoided, you can minimize your risk: report all income (the IRS matches your return against W-2s, 1099s, and K-1s), be accurate with deductions (exaggerated deductions are the #1 audit trigger), maintain organized records, file electronically (e-filed returns have lower error rates), and use a qualified preparer with a valid PTIN. Our 99.8% IRS acceptance rate means your return is prepared accurately the first time, significantly reducing your audit exposure.
Key Takeaways
- Most audits are routine correspondence audits handled by mail
- Never ignore an IRS audit notice — respond by the deadline
- Gather all requested documentation before responding
- You have the right to professional representation (EA, CPA, or attorney)
- Don't volunteer extra information — only provide what's requested
- You can appeal any unfavorable audit decision within 30 days
- E-filing with a qualified preparer reduces audit risk significantly
Ready to Take Action?
Received an audit notice? Don't face the IRS alone. Call Eugene Solutions at (407) 810-5368 for immediate help.
Our team of PTIN-verified, IRS-authorized tax professionals publishes weekly insights to help individuals and businesses navigate the tax code. Serving all 50 states virtually with physical offices in the Southeast.
IRS Circular 230 Disclosure: Eugene Solutions LLC provides this content for general informational purposes. It does not constitute tax, legal, or accounting advice. Individual tax situations vary. Consult a qualified tax professional for advice specific to your circumstances. Eugene Solutions LLC is subject to IRS Circular 230 professional standards.
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