IRS field audit: what happens when the auditor comes to you

How it starts

The IRS describes a field audit as in-person at the taxpayer's home, business, or representative's office. Like other audits, it begins with a mailed notice, and the IRS says it does not start audits by phone. The notice gives the examiner's name, a proposed date and a list of what to have ready.

Picture a small landscaping company whose owner receives a letter naming the business's returns and a set of records. The examiner proposes to visit the shop. That is typical: the exam happens where the books are.

Choosing where to meet

Because the auditor may come to your place of business or home, you can ask whether meeting at your representative's office is possible. The audits page lists a representative's office as one of the field-audit settings. Keeping the exam away from a working shop or private home can be more comfortable, though the examiner's needs matter too, so raise it early with the contact on the letter.

What they will ask for

Expect requests that follow the lines of the return: income records, expense support, and how the books are kept. Ask the examiner to put document requests in writing so you can check them off.

Answer the questions asked. If you do not know, say you will find out and follow up.

• Bank statements and deposit records that tie to reported income
• Invoices, receipts and canceled checks for the expenses named
• Your bookkeeping summary or ledger
• Contracts, payroll records or forms the letter names

Contacts with third parties

The IRS may contact people other than you, such as banks, employers or customers. IRS publications say the IRS generally must give reasonable advance notice before doing so, and that you can ask for a record of who was contacted. Pub 3498-A says you can request that list through the number on your letter.

Knowing this in advance helps you decide whether to provide a document yourself, which can answer a question without outside contacts.

Representation

You may authorize an attorney, CPA or enrolled agent to attend for you with a written power of attorney, and Publication 556 refers to Form 2848. If you clearly say you want to consult a representative during an interview, the IRS must generally suspend it, other than for summons-related interviews.

If you want your representative to handle everything, authorize that before the first meeting.

Preparing your records

Gather records before the visit and organize them by year and category. Make copies of anything you hand over. Publication 583 says records should clearly show income and expenses and be backed by supporting documents; a clear system matters more than a particular format. Reconcile statements so any gap in your books has an explanation ready.

After the visit

The examiner will tell you what comes next, which may be additional requests or a report with proposed changes. IRS Audit Defense Pro is software that helps you organize your facts and draft a response letter you review and send yourself; it is not a law firm, CPA or enrolled agent. Between meetings, a letter that lists exactly what you provided and what remains outstanding can keep the record clear.

Frequently asked questions

Sources

• IRS: IRS audits
• IRS Publication 556: Examination of Returns, Appeal Rights, and Claims for Refund
• IRS Publication 583: Starting a Business and Keeping Records

Related guides

• IRS office audit: what to expect at the interviewAn office audit is an in-person interview at an IRS office about specific items on your return.
• Correspondence audit: how an IRS audit by mail worksA correspondence audit is an IRS audit handled entirely by mail.
• Schedule C audit: supporting your business income and expensesA Schedule C audit tests the income and expenses of your sole proprietorship.
• Form 2848 vs Form 8821: Represent or Just View?Form 2848 is a power of attorney that lets the person you name represent you before the IRS and receive your tax information, within the scope you list.
• Handling an IRS Notice Yourself or Hiring a ProfessionalYou can respond to many IRS notices yourself.
• How Long Does the IRS Have to Assess Additional Tax?The IRS generally has three years from the date you file to assess additional tax.