IRS Audit Guide: What to Do After You Receive a Notice

Start with the notice, not the worst-case story

An IRS notice can feel personal and urgent before you know what it actually asks. The first job is simpler: identify the notice number, the tax year, the issue under review, the amount at stake, the response address or online option, and the deadline. Those details determine whether the matter is a request for documents, a proposed adjustment, an Appeals opportunity, or a deadline that needs immediate attention.

Keep the full notice, including the envelope and attachments, in one dated file. Compare the IRS description against the return, workpapers, source records, and prior correspondence for that year. A response should answer the agency’s actual question. Broad explanations, unrelated documents, and hurried phone calls can make a straightforward record issue harder to resolve.

If the letter asks for records, the firm’s IRS audit documents guide explains how to organize support by item and how to handle a document that is unavailable. If it is a proposed change, first determine whether the IRS is missing evidence, applying a legal rule differently, or using information that does not match the return.

Know which stage you are in

Not every IRS letter is an audit, and not every audit is at the same stage. A correspondence examination usually requests records by mail or through a designated upload process. A field or office examination can involve a broader request and more direct interaction. A CP2000 notice, by contrast, commonly begins with information the IRS received from a third party that appears inconsistent with the return. The label on the notice matters because the response path can differ.

An audit usually begins with a focused issue, but an answer may affect related items. That is why the most useful first pass is a timeline: what happened, what was reported, what documents support it, and what the IRS appears to believe. The IRS’s audit overview explains its examination process and available resolution paths. The site’s guide to what triggers an IRS audit separates genuine selection methods from popular myths.

Do not treat the dollar figure in a notice as the final answer. It may reflect a missing document, a reported payment the IRS has not matched, an adjustment that needs a legal response, or an issue that deserves a calculation review. But do treat the stated deadline as real until it is confirmed otherwise.

Build the record before you make the argument

Good audit responses are organized around the specific adjustment. For income, that may mean Forms W-2 or 1099, bank records, contracts, and a reconciliation to the return. For deductions or credits, it may mean receipts, invoices, mileage logs, proof of payment, eligibility records, and a concise schedule that connects each record to the reported amount. Send copies unless the IRS specifically instructs otherwise, and retain a complete copy of what was sent.

Chronology is often as important as a stack of documents. A payment made in January may support a deduction for a later tax year only if the governing rule permits it. A stock payment can involve grant, vesting, and sale dates. A business expense can raise a different question from a personal expense paid through the same account. An organized chronology helps identify gaps before the IRS does.

Missing records do not automatically decide a case, but they should be addressed deliberately. A taxpayer may be able to obtain duplicates from a bank, merchant, employer, customer, or government agency. If that is not possible, alternative records can sometimes help establish a fact. The goal is accuracy, not a reconstructed narrative that reaches beyond the available evidence.

Respond to the issue, then preserve your options

A timely response can mean agreement, substantiation, a request for clarification, or a reasoned disagreement. The right choice depends on the facts and the stage of the matter. If the issue can be resolved with one document, a narrowly tailored response may be best. If the IRS’s position raises a legal or factual dispute, the response should identify the disputed adjustment, explain the position, and attach support that directly addresses it.

A proposed audit change is not always the final stage. Depending on the notice and timing, a taxpayer may be able to request an administrative conference with Appeals. Appeals is not simply another chance to resend the same records. It is a dispute-resolution process where the factual record, legal support, procedural posture, and litigation risk matter. The firm’s IRS audit letter guide explains the practical differences between early correspondence, proposed changes, and the next decision points.

Before choosing a path, separate the items that are easy to prove from the items that require judgment. A payment record may resolve one adjustment immediately. A disputed valuation, worker classification, business purpose, or income characterization may require a deeper factual record and a legal position. Treating every item as all-or-nothing can obscure concessions that would narrow the dispute and issues that need more careful development.

Keep the response proportionate to the request. A concise cover letter or schedule can make a record easier to follow, particularly when several documents support one adjustment. It should identify the taxpayer, year, notice, issue, enclosed evidence, and requested result. It should not volunteer unrelated facts, speculate about intent, or assume that an informal explanation replaces the document the IRS actually requested.

Delivery and follow-up are part of the response. Use the method and address stated on the notice, retain proof of timely submission, and keep the exact version of every document sent. If the IRS offers a secure upload option, save the confirmation. If the response is mailed, preserve the tracking record and a complete copy of the package. A later call should begin with the notice number, tax year, issue, and the date the supporting records were delivered, not with a general description of the dispute.

A disciplined response also protects the taxpayer’s future choices. It creates a record that can be reviewed by a supervisor, Appeals officer, or court if the matter does not resolve at the first stage. Clear organization is not cosmetic. It helps distinguish what is proven, what remains disputed, and what must be addressed before a deadline expires. It also reduces avoidable follow-up and confusion.

Do not sign an agreement, waiver, or statute extension just because it accompanies a notice. These documents may be entirely appropriate in a particular case, but they should be read for the years, issues, and consequences they cover. A deadline extension can create time to develop evidence. It can also extend the government’s assessment period.

A 90-day letter changes the decision

A statutory notice of deficiency, commonly called a 90-day letter, is a different category of notice. It gives a taxpayer the opportunity to petition the United States Tax Court before the proposed tax is assessed. For a notice addressed within the United States, the deadline is generally 90 days from the mailing date. The deadline is jurisdictional in the practical sense that late filings can close the prepayment Tax Court route.

The IRS’s Publication 556 explains that the notice identifies the last day to file a Tax Court petition. That date should be calendared immediately and verified independently. A taxpayer may agree, pursue settlement, or petition, but waiting for a phone call or an informal review is not a safe substitute for protecting the deadline.

The dedicated 90-day letter article addresses that decision in depth. It belongs at the center of the response when the notice is statutory, not as a related issue to save for later.

Closed audits can sometimes be revisited

A closed audit is not always the end of the story, especially when the taxpayer did not participate, moved and did not receive the correspondence, has new substantiation, or identifies an IRS computational or processing error. Audit reconsideration is designed for certain unpaid assessments and disputed credit disallowances. It is not available in every case and is not a way to bypass a binding agreement or an active court deadline.

The IRS’s audit reconsideration guidance emphasizes that new or previously unsubmitted information is central. The site’s audit reconsideration article explains the eligibility questions, supporting records, and the distinction between reconsideration and a refund claim.

Time limits matter, but they do not answer every timing question

Assessment, appeal, collection, and refund deadlines are different clocks. The ordinary federal assessment period is often three years, but exceptions, extensions, unfiled returns, and specific transaction types can change the analysis. California has separate rules and reporting obligations, particularly when a federal change affects a California return.

The question is not simply, “Is this year old?” It is which clock applies, when it started, what may have suspended or extended it, and whether a federal or California issue changed the result. The firm’s assessment and collection-period guide is the focused resource for those questions.

When a tax attorney adds value

Routine record requests can sometimes be resolved efficiently with organized documents and a focused response. Early legal guidance is more valuable when the matter involves substantial proposed tax, multiple years, a business, payroll tax, foreign reporting, a dispute over intent, an Appeals or Tax Court decision, collection exposure, or facts that could affect other filings.

Galek Tax Law represents taxpayers in audit, Appeals, and tax controversy matters. A review before a critical response can help define the issue, preserve deadlines, and keep the record aligned with the larger tax position. Review the firm’s tax controversy services or request a consultation when the consequences extend beyond a simple document match.