Understanding the IRS Audit Process and Response Times

Have you experienced a delay in receiving a reply from the IRS after submitting your audit response back on August 19th, and have questions about how long it may take for the IRS to respond? This article aims to provide you with a comprehensive understanding of the IRS audit process, response times, and what to expect during this time. Let's break down the process and address common queries.

Overview of the IRS Audit Process

The IRS conducts audits to ensure that taxpayers report their financial information accurately and ensure that the taxes are correctly paid. These audits can range from simple to complex and can be conducted via mail or in person. Here's a detailed breakdown of the process:

Selection for an Audit

The IRS selects taxpayers for audits using various methods, including:

Random Selection and Computer Screening: This includes statistical formulas and cross-referencing tax returns to gather data on common issues and areas for review. Returns might also be selected based on related examination data from other taxpayers involved in the same transactions. Special Examination: The IRS might conduct a detailed examination if there are specific issues or transactions that require in-depth scrutiny.

Initial IRS Contact

After selection, the IRS will notify you by mail. You will not receive any initial contact through telephone. During the audit, the IRS may request additional information. This could be done through:

Mail: The IRS will send you a letter requesting additional information about your tax return, such as income, expenses, and itemized deductions. You can request a face-to-face meeting if you have too many records to mail. In-person Interview: The audit could take place at an IRS office, your home, place of business, or your accountant's office for a field audit.

Document Requests

The IRS may request specific documents to support your tax return. You are required to keep all records for at least three years from the date the tax return was filed. The IRS prefers electronic records produced by tax software, but they can also accept other types of records.

Confirmation of Response Receipt

To ensure the IRS has received your response, keep a record of all postal confirmations. The IRS offers additional services from the US Postal Service to confirm receipt of your documents. For audits conducted by mail, a 30-day extension can be granted if needed.

Common Questions and Answers

Here are some answers to common questions regarding IRS audit response times:

How Long Does It Usually Take the IRS to Reply?

According to the IRS, it may take between 30 to 90 days for the IRS to respond to your audit response. This timeframe varies based on the complexity of the issues, the availability of information, and the schedule of both parties involved in the audit.

If your response was submitted on August 19th and was tracked as received on August 22nd, and it has been over a month without a response, it is not necessarily unusual. However, if you are significantly past this period, you might consider following up with the IRS.

What Should I Do if I Need More Time to Respond?

If you need additional time to gather documents or address other issues, you can either fax or mail a request for an extension. The IRS can usually grant a one-time extension of 30 days. However, if you received a “Notice of Deficiency” by certified mail, additional time cannot be granted.

How Far Back Can the IRS Go?

Generally, the IRS can include returns filed within the last three years in an audit. If a substantial error is identified, the IRS may include additional years. In most cases, the IRS does not go back more than six years.

Concluding the Audit

At the end of the audit, there are three possible outcomes:

No Change: You have provided sufficient evidence to substantiate all items being reviewed, resulting in no changes. Agreed: The IRS has accepted the proposed changes that you understand and agree with. Disagreed: The IRS has proposed changes, and you do not agree with them.

What Happens Next?

If you agree with the findings, you will be requested to sign the examination report. If you owe money, the IRS offers various payment options that are explained in Publication 594: The IRS Collection Process. If you disagree with the findings, you can request a conference with an IRS manager, or pursue mediation, or file an appeal if there is sufficient time remaining on the statute of limitations.

Your Rights as a Taxpayer

Publication 1, Your Rights as a Taxpayer, outlines your rights, including:

A right to professional and courteous treatment. A right to privacy and confidentiality. A right to know why the IRS is requesting information, how it will be used, and the consequences of not providing the requested information. A right to representation by someone you choose or by someone authorized to represent you. A right to appeal disagreements both within the IRS and before the courts.

You can find more information about extending a statute of limitations in Publication 1035: Extending the Tax Assessment Period or from your auditor.