The audit letter triggers dread out of all proportion to what an audit actually is: a review of specific items on specific returns, with defined rules, defined rights, and a defined end. Your letter names the type - correspondence audit by mail on narrow issues, office audit at an IRS location, or field audit at your business for complex cases - and the type calibrates the response. None of them is an accusation. Most returns are selected by statistical scoring or document matching, not suspicion.

The Two Principles That Decide Audits

First, scope control: the audit covers the issues and years in the letter, and the most common way audits go badly is taxpayers volunteering beyond them. Answer what is asked, completely and accurately, and nothing more. Extra documents invite expansion; nervous chatter creates admissions. Represented audits run on paper through counsel, and in most of mine the client never speaks to the examiner at all - that is the procedure working, not evasion.

Second, substantiation: most audit dollars are won or lost proving deductions. Missing records are not fatal - the law permits reasonable reconstruction from bank records, vendor statements, calendars, and industry data, and a defensible reconstruction beats a forfeited deduction every time. On business audits, expect the bank deposit analysis: every deposit is presumed income until documented otherwise, so the family loan and the account transfer need their paper trail ready.

The Report Is a Proposal

When the exam ends, you are not required to agree. The examination report is an opening position: disagreement filed on time sends the case to Appeals, where an independent officer can settle based on the government's litigation risk - and audit results change there regularly. Ignore everything and a Notice of Deficiency eventually arrives with its rigid 90-day Tax Court window. The rights ladder only works if each rung is taken on time.

Before Your First Response

The response to the opening letter sets the tone for everything after - what gets produced, what gets scheduled, what impression the file makes. Send me the letter before you answer anything, and we will set the strategy in one conversation. Let's talk.