Audit Defense

and

Audit Reconsideration

What is an audit?

An IRS audit is a detailed examination of a taxpayer’s financial records to verify that income, deductions, and reported tax amounts comply with applicable tax laws. Audits may be initiated through random selection, computer screening, or as part of a related examination—such as when a business partner, investor, or other associated taxpayer is under review.

The audit process is often extensive and typically requires the submission of additional documentation and detailed explanations. If not properly managed, especially without professional representation, an audit can be expanded to include other tax years.

How Far Back Can the IRS Audit a Tax Return?

Generally, the IRS can audit tax returns filed within the last three years. However, if a substantial error is identified—such as an omission of 25% or more of gross income—the audit period can be extended to six years. In cases involving fraud or failure to file a return, there is no time limit; the IRS can audit at any time.

The IRS may also request that you extend the statute of limitations for assessing additional tax, which is typically three years from the later of the return’s due date or the date it was filed. While you are not required to agree to this extension, refusing may limit the ability to resolve the audit through negotiation or appeal.

How Does the IRS Conduct an Audit?

The IRS typically initiates an audit by mail. Depending on the circumstances, the audit may continue through correspondence or escalate to an in-person interview.

A correspondence audit is conducted entirely by mail and generally involves a request for documentation to support specific items reported on the tax return—such as income, deductions, or credits. Taxpayers can respond by submitting the requested information directly to the IRS.

If an in-person interview is required, the audit may take place at an IRS office (office audit) or at the taxpayer’s home, place of business, or representative’s office (field audit).

The IRS usually begins by examining a single tax year, typically within the last two years. If significant discrepancies are found, the audit may be expanded to include additional years—often up to three. If no substantial issues are identified, the audit is usually closed without further review.

How Long Does an Audit Take?

The duration of an audit varies based on several factors, including the type of audit, the complexity of the issues, the availability of documentation, scheduling logistics, and whether you agree or disagree with the IRS’s findings.

After the audit is conducted, the IRS typically sends an Audit Report (also known as an Examination Report) within a few weeks. This report outlines any proposed changes to your tax return. If the IRS determines that additional tax is owed, it may assess penalties and interest and issue a Statutory Notice of Deficiency (Letter CP3219A)—often following a Notice CP2000 if the matter remains unresolved.

You still have the right to challenge the proposed changes, either through the IRS Independent Office of Appeals or by filing a petition in the U.S. Tax Court.

What is an audit reconsideration ?

Audit Reconsideration is a process that allows the IRS to re-examine a tax assessment made after an audit or a Substitute for Return (SFR)—a return the IRS files on your behalf if you fail to file one yourself. You may request an audit reconsideration if you have not previously exercised your right to appeal or if new circumstances justify a review.

Common reasons for requesting an audit reconsideration include:

  • You have new documentation to support your income, deductions, or expenses;

  • You disagree with the tax liability assessed based on an SFR;

  • You did not attend the audit appointment or failed to submit requested information;

  • You never received the IRS audit report due to a change of address.

When You Cannot Request an Audit Reconsideration

  • YouYou are not eligible to request an Audit Reconsideration if any of the following apply:

    • You have already paid the full amount owed. However, you may still be able to file an amended tax return along with a formal claim for refund;

    • You previously agreed to the assessed liability by signing a binding agreement, such as IRS Form 906 (Closing Agreement) or an Offer in Compromise;

    • A final determination has been issued by the U.S. Tax Court or another court regarding your tax liability.

    If your request for Audit Reconsideration is accepted, the IRS will give you an opportunity to submit supporting documentation to substantiate the items reported on your original tax return. If successful, the IRS may reduce or eliminate the prior audit assessment, including related penalties and interest.

Do I need a representative?

Just as you wouldn’t go to court without legal representation, you shouldn’t face the IRS in an audit without a knowledgeable tax professional. IRS audits must be taken seriously, as they can easily expand beyond the initially stated year to include multiple tax years—especially if handled improperly. In many cases, the cost of proper representation is far less than the total tax, penalties, and interest you may owe without it.

Our firm has successfully represented numerous taxpayers in IRS audits. We’ve helped limit the scope of audits to fewer years and, in many cases, secured audit reconsiderations to reduce or reverse proposed liabilities.

If you’ve received an IRS audit notice—whether for personal or business taxes—contact us immediately beforeresponding or providing any information to the IRS. Early intervention is critical to protecting your rights and financial interests.