Not every audit looks the same
Many IRS audits are conducted entirely by mail and focus on one or two items on a return. Others are held at an IRS office, or in the field at your home or business, and can reach several years and related entities. The New York State Department of Taxation and Finance runs its own audits of income, sales, and withholding taxes, and New York City audits some business taxes separately. A genuine audit usually starts with a letter, and an unexpected call or text demanding immediate payment is more often a scam than an audit. Being selected does not by itself mean anyone suspects wrongdoing.
Assembling the record behind the return
The audit letter or information document request usually lists what the examiner wants to see, and answering exactly that request is generally wiser than sending everything you own. Collect the return as filed, the workpapers and statements it was built from, receipts and invoices for the items questioned, and bank records for the period. If a preparer filed the return, ask for their file. Where a record is missing, there may be other ways to reconstruct it, and it is better to discuss that before the examiner raises it. Never alter, backdate, or create documents to fill a gap.
Choices that come up early
Examiners sometimes ask taxpayers to extend the period the agency has to assess tax, and whether and how to agree is a decision worth making with advice rather than on the spot. You can generally have a representative deal with the examiner instead of attending meetings yourself. If the audit ends in proposed changes you do not accept, there is usually a path to an administrative appeal and later to court, each with its own deadline. In a first conversation we read the letter with you, identify the scope and the agency, and decide who will communicate with the examiner.
