You checked the mail and there it is — a letter from the Internal Revenue Service. Your stomach drops. Your mind races. Are they coming after you? How much will you owe? Are you going to jail?
Take a breath. Here's what to actually do.
Step 1: Don't Panic
An IRS audit letter is not an accusation of wrongdoing. The IRS audits less than 1% of returns, and most audits are handled entirely by mail. Many result in small adjustments or no change at all.
An audit is a request for information — not a criminal investigation.
Step 2: Read the Letter Carefully
IRS letters specify exactly what they're questioning. It might be:
- A specific deduction (home office, charitable contributions)
- A discrepancy between your return and a 1099 or W-2
- A request for documentation supporting certain income or expense claims
Note the deadline for response. Note the agent's name and contact information. Note which tax year is being examined.
Step 3: Don't Respond Yet — Call a CPA
Before you write a single word to the IRS, contact a CPA (or enrolled agent). They can:
- Review the letter and assess the severity
- Determine the best strategy for response
- Handle all communication with the IRS on your behalf
- Represent you with full legal authority (via Form 2848, Power of Attorney)
You have the right to professional representation. Use it.
Step 4: Gather Your Documentation
Based on what the IRS is questioning, gather supporting records:
- Receipts and invoices
- Bank and credit card statements
- Mileage logs
- Contracts and agreements
- Photos (for home office exclusive use)
- Any other records that support your tax positions
If you're missing documentation, your CPA can help determine what alternative evidence the IRS may accept.
Step 5: Respond by the Deadline
Never ignore an IRS letter. Failing to respond results in the IRS making changes to your return without your input — and they'll always assume the worst-case scenario for you.
If you need more time, your CPA can request an extension from the examining agent.
Step 6: Provide Only What's Requested
Answer the questions asked. Provide the documents requested. Nothing more. Volunteering extra information can open new lines of inquiry that weren't part of the original audit.
Your CPA knows exactly what to include and what to leave out.
What NOT to Do
- Don't ignore the letter. Silence makes things worse.
- Don't call the IRS in a panic. Anything you say can be used.
- Don't send boxes of unsorted documents. Be organized and targeted.
- Don't agree to proposed changes without reviewing them. You have the right to disagree and appeal.
- Don't try to handle a complex audit alone. The cost of CPA representation ($1,000-$5,000) is almost always less than the additional tax, penalties, and interest you'd face without professional help.
Possible Outcomes
No change: The IRS reviewed your documentation and agrees your return was correct.
Agreed adjustment: They propose changes, you agree, and you pay the additional tax plus interest.
Disagreed: You disagree with their findings. You can appeal to the IRS Office of Appeals — an independent body that resolves many disputes.
Find Audit Help Now
If you've received an IRS letter, time matters. Find a CPA with audit representation experience at ListMyCpa.com. Search by state and city to find someone who can start protecting you today.