The Four Types of IRS Audits

IRS audits can be a scary thing for some business owners. There are generally four different types of IRS audits: correspondence audits, office audits, field audits, and program audits. An IRS correspondence audit is exactly that; you receive a letter from the IRS and you’re going to respond to that letter. It’s generally for one line item on a Form 1099 that you didn’t report; one expense that they want verification of. It’s done through the mail, you respond timely, you provide the documentation, and generally, it’s resolved relatively quickly.

The second audit would be an office audit. That is where the individual or the business must go to the IRS office. These audits are generally one day and you want to go in there with all of the documentation you have, because you want to resolve it in that one day. You don’t want to have an office audit be delayed for months and months when it could be resolved that day.

The third type of an audit is a field audit. That is where the IRS agent will come to your place of business. They want to see the books and records and what happens at the business. These audits generally take a much longer time. It’s a really detailed process. Most of the time it starts off with a one year, but very easily with field audits, it can expand to a two- or three-year audit.

The fourth type audit is called a program audit, and it’s the audit that you do not want. The IRS has to go back and have some sort of threshold and determination to see what line items what expenses taxpayers are reporting. Are they overstating certain items or understating. A program audit is set up to audit every single line item on the tax return. This is so detailed, you need to go back and show the IRS in that audit each line item on your tax return. Generally speaking, program audits are limited to one year, but it can be a very tedious process. So when you receive your IRS audit, notice it’s an important to understand which type of audit you’ve received.

Author Photo

Allison Soares

Allison Soares, a renowned tax attorney, excels in representing clients before the IRS, FTB, EDD, and CDTFA. With a Bachelor of Arts in Finance from the University of Wisconsin, Milwaukee, and a transformative teaching stint in Brazil, Allison’s diverse background enriches her legal expertise. She pursued law at St. Thomas University School of Law, Miami, complementing it with an MBA in accounting and forensic accounting. Further honing her skills, she obtained a Master of Laws in Taxation from the University of San Diego School of Law. As an adjunct professor at San Diego State University, Allison imparts her knowledge in tax procedures, practice, and ethics. Her accolades include being named Best of the Bar by the San Diego Business Journal and multiple Super Lawyer recognitions. Committed to community service, she volunteers with Forever Balboa Park and Friends of Balboa Park. Allison’s authoritative contributions in tax law are showcased through her publications and speaking engagements.

Read More Articles By Allison Soares