Taxpayers who receive an audit letter from the Internal Revenue Service (IRS) should first read the letter carefully, Benjamin Akins, professor of legal studies and taxation at Georgia Gwinnett College, said on Mar. 31.
Akins said that understanding the type of audit is important for knowing how to respond. He explained there are three types: correspondence audits, office audits, and field audits. “The first thing you need to do is read the letter,” Akins said. “The letter will have all sorts of information about why you’ve received the letter, who the letter is from and a number you can call if you want to talk to someone to get more information. The IRS will never call you because they always begin the process by mail.”
Correspondence audits involve exchanging letters with the IRS about specific issues in a tax return and are generally resolved quickly through mailings. Office audits require visiting a local IRS office for further discussion but remain limited in scope. Field audits are more serious and may involve auditors visiting a taxpayer’s location when necessary.
Akins noted that large deductions or mismatched information between forms such as W2s or 1099s can trigger an audit due to discrepancies flagged by computer programs used by the IRS. “If the information from those documents and what you file don’t match, it can trigger an audit,” he said.
He advised taxpayers not to panic if audited but instead gather relevant records promptly: “Audits are not accusations that you’ve done something wrong… Audits are just their way of asking questions and wanting you to show your justification for the numbers you put on your return.” Most audits can be handled without outside help if records are organized.
If additional taxes are owed after an audit, Akins explained that taxpayers receive a 30-day letter with options either to pay or appeal within an independent division of the IRS. If appeals fail, a final 90-day letter gives time either to pay or file suit in tax court without prepayment required.
Akins also pointed out resources like the Taxpayer Advocate within the IRS for those facing financial hardship during an audit or communication breakdowns with officials.
Reflecting on his own experience being audited over charitable donations in 2012, Akins emphasized keeping good records: “Keep good records, and… keep your tax records for about seven years.” He clarified most audits remain civil matters rather than criminal cases.
