Imagine this: you’re at your office or place of business when an IRS Revenue Agent shows up, badge in hand, asking to “review your records.” This is called a field audit, and it’s the most serious — and potentially disruptive — form of IRS examination. Unlike correspondence or office audits, field audits give the IRS broad authority to inspect your books, assets, and operations right where you work. They are often triggered by large deductions, unreported income, or ongoing business losses — and they can easily expand into multiple tax years.
📘 Official IRS References: Publication 556 — Examination of Returns, Appeal Rights, and Claims for Refund
What Is an IRS Field Audit?
A field audit is an in-person IRS examination conducted at your home, business, or accountant’s office. It’s the most comprehensive audit type — and also the one most likely to uncover potential discrepancies or unpaid tax.
A Revenue Agent leads the examination. Their authority includes:
- Reviewing your books and records
- Interviewing you and your employees
- Inspecting your business premises
- Requesting documents, invoices, and bank statements
What IRS Field Agents Look For?
During a field audit, the IRS compares your financial reality with your reported income and expenses. They analyze:
- Inventory records and depreciation schedules
- Bank deposits vs. gross receipts
- Expense categories vs. business type
- Cash inflows/outflows vs. reported revenue
- Employee vs. contractor classifications
IRS Authority
During an IRS field audit, the IRS can:
- Review business books and ledgers
- Summon witnesses or records
- Request third-party information (e.g., banks, vendors)
- Interview employees
Pre-Audit Preparation Checklist
There are things you can do to prepare for an audit.
| Step | Action |
|---|---|
| Review audit notice | Identify the years and issues being examined. |
| Collect bank statements | Match to reported revenue. |
| Gather invoices & receipts | Organize by category. |
| Verify payroll records | Ensure 941s and W-2s match books. |
| Separate business & personal expenses | Use separate accounts. |
| Retain legal counsel | Engage attorney before contact. |
💡 Insight: Disorganized records make you look unreliable — even if accurate. A tax attorney ensures every document tells a consistent financial story.
How a Tax Attorney Can Protect You?
A tax attorney serves as your front line in every stage of the audit.
| Attorney Role | Function | Result |
|---|---|---|
| Pre-audit preparation | Review returns, reconstruct missing records | Accurate defense narrative |
| Scope management | Limit IRS to listed issues and years | Prevents expansion |
| On-site representation | Attend audit on your behalf | Shields you from questioning |
| Negotiation | Resolve adjustments and penalties | Saves money and avoids escalation |
| Appeal preparation | File formal protest or Tax Court petition | Protects appeal rights |
After the Audit: Possible Outcomes
The possible outcomes after the audit are the following:
| Outcome | Meaning | Your Options |
|---|---|---|
| No Change | IRS accepts your return as filed. | Case closed. |
| Agreed Adjustment | You sign Form 4549 and pay balance. | May request payment plan or penalty abatement. |
| Unagreed Adjustment | You refuse to sign Form 4549. | File appeal. |
IRS Appeal Rights
If you disagree with the audit results:
- Request for Appeals Review.
- Provide a written protest letter detailing each disputed issue, facts, and legal authority.
- Meet with an Appeals Officer (independent of your examiner).
- If unresolved, file a petition with U.S. Tax Court within 90 days of the Notice of Deficiency.
📘 References: Publication 5 — Your Appeal Rights
Why Legal Representation Is Essential?
Facing the IRS without counsel is like walking into court without a lawyer. A tax attorney ensures the process stays fair, your rights are protected, and your exposure minimized.
Key Legal Protections:
- Attorney-client privilege (unavailable with preparers)
- Power to stop improper questioning
- Knowledge of audit procedure and appeals strategy
- Ability to negotiate settlements or penalty relief
📘 Reference: Publication 947 — Practice Before the IRS
Take Control Before the IRS Does
When the IRS shows up at your business, preparation and legal strategy are your strongest defenses.
With proper representation, a field audit can be controlled, managed, and often resolved favorably — before it escalates.
Contact Pelham PLLC today to schedule a confidential IRS field audit defense consultation. Our experienced tax attorneys will:
- Review your IRS notice and transcripts
- Manage all contact with the IRS
- Conduct on-site defense and documentation review
- Negotiate adjustments or penalty abatements
- Appeal any adverse findings
Don’t let the IRS walk through your doors unchallenged — let us stand between you and the government.
FAQs
Can the audit turn criminal?
Yes, if the agent suspects fraud or evasion — immediate attorney representation is critical.
What if the IRS disallows my deductions?
You can appeal to IRS Appeals or Tax Court — your attorney handles both.
