The IRS conducts two types of audits – the correspondence audit and the face-to-face audit. If you receive a notice of either of these audits, your IRS Problems may just be starting.

The Correspondence Audit

The correspondence audit is conducted through the mail. The IRS computers review every tax return and determine if there are needed corrections. If so, a notice is issued to the taxpayer. Do not ignore this IRS notice. Act immediately, especially if it says you owe more taxes. Any delay may add penalties and interest to your bill. If you disagree with the information on the notice, put it in writing with information or documents necessary to prove your case, and send it with your response. Keep copies of all correspondence for your records.

The Face-to-Face Audit

The face-to-face audit is an actual meeting between you and a revenue agent or tax auditor. You will receive a notice in the mail with a specific time and date indicated or with a request that you call to make an appointment.

What do I do next?

1. Do not ignore this notice. If you do not respond within 30 days, the IRS can take action. Your next mailing may be a bill.

2. Read the notice and follow the directions. You will be informed of what items are under review and what information you will need to bring with you to the audit.

3. Get your records in order. It is your responsibility to prove that the information on your tax return is correct. If you come to the audit organized and prepared for the auditor’s questions, it will make the job easier for the auditor. This is a plus on your side.

4. Replace missing records. If you find that necessary records are missing, request duplicates as soon as possible. You need all the supporting documents in hand when you go to the audit.

5. Do not bring any other information than what was requested. If there are questions regarding information not requested, you can inform the auditor that the item is at home. Usually whatever the issue was, it will be dropped.

6. Do not come to the audit with an attitude. Be polite and courteous even if the auditor seems unreasonable. This can only work in your favor.

7. Bring only copies with you. Do not give your original documents to the auditor. If you have to bring originals, ask the auditor to make copies and return the originals to you.

8. Stay on task. Try to answer questions with either "yes" or "no." Valuable information can be obtained from a friendly discussion. If you talk about having just made a big purchase or having just returned from a vacation, the auditor may find a reason to believe that you have not reported all of your income on your tax return. This could indicate to him that he needs to expand the audit.

9. Know your rights. You need to understand your rights and the actual audit process. You need to know how to disagree if you believe the IRS is in error. It is best to settle during the audit but you do have the right to request an appeal if necessary.