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The three types of IRS tax audits

On Behalf of | Oct 2, 2023 | IRS

Tax audits can be a nerve-wracking experience, regardless of what type of audit you face. Each type of audit serves a specific purpose and involves different levels of scrutiny.

Some types of audits are also far more intensive than others.

Correspondence audits

A correspondence audit, or mail audit, is the least invasive type of IRS audit. It typically involves the IRS requesting additional information or clarification regarding specific items on your tax return. These requests usually come in the form of letters and often involve easily verifiable issues such as missing forms or documentation. When you receive a correspondence audit letter, be sure to respond promptly and provide the requested information. Failing to do so may escalate the audit to a more thorough examination.

Office audits

Office audits take place at IRS offices. In this type of audit, you visit your local IRS office, where an IRS examiner reviews your tax return and supporting documents in person. Office audits typically take place when the IRS has identified discrepancies or potential issues that are not resolvable through correspondence alone.

Field audits

This type of audit may be the most comprehensive and potentially intimidating type of all. In a field audit, an IRS agent visits your home, business or tax professional’s office to conduct an in-depth examination of your financial records, transactions and assets. Field audits usually take place when the IRS suspects significant discrepancies or potential fraud in your tax return. These audits are more time-consuming and thorough, often involving a thorough review of multiple years’ worth of financial records.

While audits may seem daunting, only a very small percentage, or about 0.38% of taxpayers, ever become the subject of a tax audit.