If you’ve received an IRS audit notice, you’re not alone — and you don’t have to panic. Each year, the IRS audits hundreds of thousands of tax returns, often because of simple discrepancies or random selection. Preparation is your strongest defense.
Knowing how to prepare for an IRS audit means more than gathering receipts — it’s about organization, strategy, and understanding your rights under the law. According to IRS Publication 556: Examination of Returns, taxpayers who respond promptly and provide clear documentation usually resolve audits faster and with fewer penalties.
This guide explains what to expect, what to bring, and how to prepare your case like a professional.
Understand What Type of Audit You’re Facing
Before preparing, identify which kind of audit the IRS has initiated.
- Correspondence Audit: Conducted by mail; limited to specific items (e.g., income, deductions, or credits).
- Office Audit: Conducted at an IRS office; usually involves several issues or multiple years.
- Field Audit: The most serious type, conducted at your home or business by a revenue agent.
Each audit type requires a different level of preparation. Review your audit letter carefully — it lists which parts of your return are being examined and includes the auditor’s contact information.
📘 Learn more: Types of IRS Audits
Review the IRS Notice and Deadlines
Your audit notice will come by mail and include:
- The tax year(s) under review
- The specific issues being examined
- A response deadline (usually 30 days)
- Instructions for submitting documents
👉 Do not ignore deadlines. Missing them can lead to an automatic assessment of additional tax, penalties, and interest. If you need extra time, you can request an extension in writing — the IRS typically grants short delays for reasonable cause.
📘 Reference: IRS Understanding Your Notice or Letter
Gather and Organize Your Documentation
The backbone of a successful audit defense is well-organized records.
Documents Commonly Requested by the IRS
- Income Records: W-2s, 1099s, bank statements, PayPal or Venmo reports
- Expense Receipts: Business, charitable, and medical expense records
- Mileage Logs and Travel Records: To support vehicle or travel deductions
- Bank and Credit Card Statements: Matching your claimed expenses
- Home Office Documentation: Square footage, photos, utility bills
- Business Books and Ledgers: Income statements, balance sheets, payroll records
Make sure your documentation matches the numbers on your tax return.
🗂️ Tip: Use folders (physical or digital) labeled by deduction type or month to present information neatly. This makes it easier for the IRS examiner — and shows good faith compliance.
📘 Reference: IRS Recordkeeping Guidelines – Publication 583
Match IRS Records to Your Return
Use the IRS’s Get Transcript service to access wage, income, and account information that the IRS already has. Compare their data with your return — this helps you identify discrepancies before the auditor does.
If you find errors, note them and be ready to explain or correct them.
Know Your Rights as a Taxpayer
Taxpayers under audit have important legal protections, as outlined in the IRS Taxpayer Bill of Rights. These include:
- The Right to Professional Representation: You can hire a tax attorney, CPA, or enrolled agent to represent you.
- The Right to Privacy and Confidentiality: The IRS must respect your privacy during an examination.
- The Right to Challenge and Appeal: You can dispute audit findings and appeal within the IRS or to Tax Court.
Understanding these rights empowers you to push back respectfully when the IRS overreaches or misinterprets your records.
Prepare for the Audit Meeting
If your audit is in person (office or field), preparation and professionalism matter.
Before the Meeting:
- Review your entire return — line by line.
- Anticipate likely questions about income, deductions, or expenses.
- Highlight key records in your file for quick access.
During the Meeting:
- Be polite and concise — answer only what’s asked.
- Do not volunteer extra information beyond what’s relevant.
- If you don’t know an answer, say you’ll follow up in writing.
- Bring your representative (tax attorney or CPA) if possible.
After the Meeting:
- Request copies of any documents or summaries the IRS examiner provides.
- Ask about the next steps and estimated timeline for their review.
📘 Reference: IRS Audit Process Overview
Address Potential Red Flags Beforehand
Certain deductions or inconsistencies can make audits more complicated. Be ready to substantiate these common “audit triggers”:
- Home Office Deduction: Must be exclusively used for business.
- Large Charitable Donations: Require written receipts for any contribution over $250.
- Business Losses: If reported for multiple years, the IRS may question whether your business is actually a hobby.
- Vehicle Deductions: Keep mileage logs and proof of business use.
Review IRS Publication 463 for travel and vehicle expense rules.
Consider Professional Representation
Even if your audit seems straightforward, hiring a tax attorney can make a major difference. They can:
- Communicate directly with the IRS on your behalf
- Organize and present documentation strategically
- Negotiate penalties or settlements
- Prevent self-incrimination during questioning
⚖️ Remember: You are not required to attend an IRS audit personally if you have authorized representation using Form 2848 Power of Attorney.
Review and Respond to the Audit Findings
After the audit, the IRS will send a report (Form 4549). You can either:
- Agree and pay the balance or set up a payment plan, or
- Disagree and file an appeal within 30 days.
If you disagree, consult IRS Publication 5: Appeal Rights for next steps.
Keep Records and Stay Compliant Going Forward
Once your audit is closed, maintain organized records for at least three years (seven if you had major adjustments). Filing accurate, consistent returns in the future helps prevent re-audit or additional scrutiny.
Need help with a similar issue? Contact our firm today for a consultation.
Preparing for an IRS audit takes time and diligence — but it’s entirely manageable with the right approach. Stay calm, stay organized, and respond professionally. Most audits end without penalties when taxpayers cooperate and provide proper documentation.
If you’ve received an audit letter or want to ensure your records are airtight, contact Pelham PLLC today. Our experienced tax attorneys represent individuals and small businesses in all stages of IRS audits — from documentation through appeal.
📘 Official Resource: IRS Audits Overview
FAQs
What documents should I bring to an IRS audit?
Bring all records supporting your tax return — W-2s, 1099s, receipts, mileage logs, and bank statements. The IRS will specify what it wants in your audit letter.
Can I postpone my IRS audit?
Yes. You can request an extension in writing if you need time to gather documents or hire representation.
What happens if I can’t find my receipts?
You can reconstruct records using bank statements, invoices, and other proof of payment. The IRS allows reasonable reconstruction under IRS Publication 583.
Should I hire a tax attorney for an IRS audit?
Yes — especially if your audit involves large amounts, multiple years, or potential penalties. An attorney can represent you, negotiate on your behalf, and ensure due process.
