Types of IRS Audits: Mail, Office, and Field Audits

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Mail Audits

A mail audit is the most straightforward type of IRS audit, typically initiated by a letter requesting specific information to verify items on your tax return. The IRS may be seeking clarification on a particular aspect of your return, such as income, deductions, or credits. Before starting the resolution process, it is key to understand what’s being audited and the deadline for your response. To resolve a mail audit, you generally need to:

  • Gather documents: Collect the tax records for the year in question and all supporting documentation requested by the IRS. Prepare a response for each item under audit, including the supporting documentation. If you are missing documentation, try to reconstruct them. It is crucial to provide everything the IRS asks for and that supports your response.
  • Submit your response: Send a complete response to the IRS before the deadline.  Normally, you mail the response, but often the IRS provides you with a “Secure Messaging” link or a fax number to respond directly to the auditor.
  • Timeline: The IRS usually gives you 30 days to respond. If you don’t provide sufficient documentation or fail to respond within the timeframe, the IRS may move forward with a proposed adjustment to your tax liability.
  • Outcome: If the IRS proposes changes, you can either agree to the adjustment or dispute it by providing further evidence. If the issue remains unresolved, you can appeal the decision to challenge the proposed adjustments or any penalties. You will work directly with the Appeals Officer on the resolution.  If you do not agree with the Appeal, you can always petition the United States Tax Court to review your case before the tax is assessed. You must request all appeals timely. Failure to meet deadlines for appeal will result in lost appeal rights.

Mail audits are relatively common for minor discrepancies or missing documents and can often be resolved quickly if you have adequate records.

Office Audits

An office audit involves a more in-depth review than a mail audit and usually requires an in-person meeting with an auditor at an IRS office. The IRS uses office audits when they need to review a broader range of documentation, or when the issues involved are more complex. Key steps in an office audit include:

  • Initial Interview: You, or your representative, will meet with the auditor to discuss the details of your return. The IRS will ask questions and request additional documents to verify the accuracy of your reporting.
  • Document Submission: You must bring or send in a variety of records that might span multiple areas of your tax return, including income, deductions, expenses, and any other relevant details.
  • Resolution: The audit may result in proposed adjustments, which you can either accept or dispute. If you disagree with the findings, you can request an appeal through the IRS Independent Office of Appeals.

Office audits tend to focus on small business owners, self-employed individuals, or taxpayers with more complicated tax returns.

Field Audits

A field audit is the most comprehensive and intrusive type of IRS audit. In a field audit, a revenue agent will visit your home, business, or the office of your tax professional to conduct an in-person examination of your financial records. These audits are often triggered when the IRS believes there are significant discrepancies or areas of non-compliance. Important aspects of a field audit include:

  • Initial Meeting: The audit typically begins with an initial meeting where the revenue agent will explain the scope of the audit and the specific issues under review. The taxpayer or their representative will have an opportunity to provide an explanation.
  • Comprehensive Review: The agent will request extensive documentation, often covering multiple tax years. This may include bank statements, contracts, invoices, and payroll records, depending on the scope of the audit.
  • On-site Investigation: Since field audits often involve a visit to your business or home, the agent may observe business operations, inspect assets, and verify other elements of your tax return in person.
  • Extended Timeline: Field audits can take a year or more to complete, especially if complex issues or multiple tax years are involved. The process can involve multiple meetings, document reviews, and detailed inquiries.

If you do not agree with the results of the audit, you can request an appeal through the IRS Independent Office of Appeals, similar to office audits.

Comparison

Mail Audits are simpler and often focused on one or two specific issues, handled primarily through correspondence.

Office Audits are more comprehensive and involve a face-to-face meeting at an IRS office, often for more complex tax returns or larger potential discrepancies.

Field Audits are the most detailed and intrusive, typically conducted in person at your home or place of business and involve a thorough review of your financial situation.

In all types of audits, you have the right to appeal any findings or adjustments if you believe they are incorrect.

Co-Founder
For 19 years, Jim worked at the IRS in various compliance enforcement positions. Since 2006, Jim has been in private practice and tax and accounting software development.