Every year, thousands of Texas taxpayers and business owners receive the letter that nobody wants: an IRS audit notice. Whether it is a simple correspondence audit requesting documentation for a single deduction, or a comprehensive field audit of your business records, an IRS examination demands immediate, informed, and strategic action.
The good news is that with proper representation and thorough documentation, most IRS audits are resolved favorably. The key is knowing your rights, understanding the process, and working with an experienced Texas tax professional who handles audit representation regularly.
The most common type of audit is handled entirely through the mail. The IRS sends a notice requesting documentation to support a specific item on your return most often a deduction, credit, or income figure that does not match IRS records. These are typically resolved by providing clear documentation within the response deadline.
An office audit requires you or your representative to appear in person at an IRS office with your financial records. These are more comprehensive than correspondence audits and typically examine multiple items on your return.
The most extensive type, a field audit involves an IRS Revenue Agent visiting your home or business to examine your records directly. Field audits are typically reserved for complex returns, business owners, and high-income individuals.
This random audit program examines every item on your return and is used by the IRS to calibrate its compliance programs. Every deduction, credit, and income figure must be documented in full.
The IRS Taxpayer Bill of Rights guarantees you the right to professional representation during any IRS proceeding. You are not required to speak directly to the IRS you can authorize a CPA, Enrolled Agent, or tax attorney to represent you through IRS Form 2848 (Power of Attorney).
You also have the right to appeal any IRS determination to the Independent Office of Appeals, and ultimately to the U.S. Tax Court if you disagree with the outcome.
IRS Letter 105-C is a statutory notice of claim disallowance, most commonly issued in response to amended returns claiming refunds that the IRS disputes. Upon receiving a 105-C letter, you have two years to file a refund suit in U.S. District Court or the U.S. Court of Federal Claims, or to pursue administrative appeals.
Missing this two-year window permanently forfeits your right to pursue the claim in court making immediate professional consultation essential.
When you work with FAS Accounting Services for audit representation, our team handles all communication with the IRS on your behalf. We review your return and supporting documentation, prepare a comprehensive response package, and represent you in any IRS conferences or hearings.
Our goal in every audit is to resolve the examination at the lowest level possible ideally through the examination itself or the Appeals process without resorting to litigation. Our deep knowledge of IRS procedures and Texas business tax law gives our clients a significant advantage.
Do not ignore it. Read the notice carefully to understand what is being examined, gather relevant documentation, and immediately contact a Texas tax professional with audit representation experience. Responding by the deadline is critical extensions can be requested, but the deadline should never simply be missed.
Yes. A licensed CPA or Enrolled Agent can represent you before the IRS in all examination and appeals proceedings through Form 2848 (Power of Attorney). You do not need a tax attorney for most IRS audits a qualified CPA with audit experience provides excellent representation.
Common triggers include high deduction-to-income ratios, home office and vehicle deductions, multi-year business losses, cash-intensive operations, unreported 1099 income, and round-number deductions that suggest estimation. Accurate record-keeping is your best protection against all of these.
A correspondence audit is the most common type the IRS requests documentation by mail for a specific item on your return. You respond by mail with supporting documents by the deadline. A tax professional can prepare a comprehensive and persuasive response package that resolves most correspondence audits quickly.
Correspondence audits are often resolved in 2-3 months. Office and field audits typically take 6-12 months from the initial notice to final resolution. Complex cases involving appeals can extend to 18-24 months. Working with an experienced representative typically shortens the process significantly.
