Is this IRS letter an audit? Audit types, the process, deadlines and what to do next

Look for the notice or letter number, usually in the top or bottom right corner. Most CP notices are computer-generated: a CP2000 proposes changes after income matching, CP11 and CP12 correct math errors, and a CP14 is a bill. None of these is an audit. An audit letter says your return has been selected for examination and lists what to send. Either way, answer by the date on the letter.

Clients often come in saying "I'm being audited," and most of the time it's a notice. The difference matters because the response and the consequences aren't the same.

Description: The left column is the letter, the middle explains what the IRS is doing, and the right column shows what you do and by when.

Letter	What it is	Is it an audit?	What you do
CP2000	Automated Underreporter: W-2, 1099 or 1099-K data the IRS received doesn't match your return, so it proposes changes	No, but ignoring it turns it into an assessment	Reply by the date on the notice (usually about 30 days): sign and pay if you agree, or explain and attach proof if you don't
CP11, CP12, CP13 and similar	Math error: the IRS changed a calculation or credit on your return, which can mean a balance due or a bigger refund	No	If you disagree, ask in writing for an abatement within 60 days, or you lose the right to take it to Tax Court
CP14	Balance-due bill for tax shown on the return	No	Pay or set up a payment plan; CP501, CP503 and CP504 reminders follow
CP3219A	Statutory notice of deficiency after income matching (a 90-day letter)	Not an audit, but a legal notice	Petition Tax Court within 90 days or the tax is assessed
Correspondence audit letter (such as Letter 566)	A mail audit asking you to support specific items	Yes	Send the requested records or use the IRS document upload tool; ask for more time before the deadline if you need it
Office or field audit letter	An appointment at an IRS office, or an agent visiting	Yes	Get a representative first, confirm the scope and document list, then set the time and place

• The CP2000 is the one we see most, especially for online sellers and freelancers. Usually a 1099-K, 1099-NEC or brokerage 1099-B doesn't match the return. A 1099-K reports gross receipts and needs a reconciliation (see our guide at yclcpa.com/1099k).
• The 60-day window on math errors: if you object in writing within 60 days, the IRS has to reverse the change and use the normal deficiency procedures.
• If you don't answer a CP2000, the IRS sends a 90-day notice of deficiency and then assesses and collects.

A correspondence audit is handled entirely by mail and usually covers one or two items. An office audit is an interview at an IRS office. A field audit brings a revenue agent to your home, business or representative's office; it's the most thorough and is mostly used for businesses and complex self-employment returns. All three start with a letter.

• How returns are picked: the IRS doesn't publish its selection formulas. It says returns may be chosen by computer scoring, information matching, or because they're related to another taxpayer under audit. Being picked doesn't mean you did anything wrong.
• Repeat audits: if the same items were examined in either of the two prior years with no change, tell the IRS, which may decide to end the audit (Publication 1).
• Criminal investigations are different. IRS Criminal Investigation special agents don't work civil audits and don't demand payment. If one contacts you, talk to an attorney right away.

The IRS usually makes first contact by regular mail and won't start an audit by phone. It won't call demanding immediate payment, ask for gift cards or wire transfers, or threaten to have you arrested or deported, and a social media direct message is never from the IRS. Payments go only to the "United States Treasury." If you're unsure, look up the notice number on irs.gov or check your IRS online account.

• Look up the number on the IRS "Understanding your IRS notice or letter" page and make sure the description matches.
• Check your account. Audits and balances due generally show up in your IRS Online Account.
• Call back on an official number, not one from a suspicious letter or text. Compare any number with the one listed on irs.gov.
• Ask to see two credentials. Revenue agents and revenue officers carry an IRS credential and an HSPD-12 card, both with a photo and serial number, and you have the right to see them. A visit is normally preceded by a letter.
• Common scams: a caller claiming you owe tax and must pay now, a text promising a refund if you click a link, fake IRS social media accounts. Report them to TIGTA (the Treasury Inspector General for Tax Administration) and forward suspicious email to phishing@irs.gov.

Generally 3 years, counted from the later of the due date or the date you filed; after that the IRS can't assess more tax. It's 6 years if you left out more than 25% of the gross income shown on the return, or more than $5,000 of income from foreign financial assets. There's no limit for a fraudulent return or no return. And an unfiled international information return keeps the period open.

• The IRS rarely goes past 6 years. It says audits generally include returns filed in the last 3 years, it may add years if it finds a substantial error, and it usually doesn't go back more than 6.
• Should you sign Form 872? The examiner may ask you to extend the statute. You don't have to, but then the examiner decides on what's in the file, and Appeals generally needs at least 365 days left on the statute to take a case. Whether to sign, for how long and for which issues is a conversation to have with your representative.
• Collection is separate. Once tax is assessed, the IRS generally has 10 years to collect.
• Refunds have limits too: generally 3 years from filing or 2 years from payment, whichever is later. If an audit ends in a refund that has to reach you abroad, see our guide at yclcpa.com/refundcheck.

The IRS doesn't publish its selection criteria and we won't guess. But in the letters we actually see, the same situations come up: income that doesn't match 1099s or 1099-Ks, several years of large Schedule C losses, cash-heavy businesses, and foreign accounts or income that weren't reported. None of these means an audit is coming. It means the records should be ready.

• Returns that don't match 1099s or 1099-Ks. Information returns are matched automatically. A 1099-K is a gross figure that includes shipping and marketplace-collected sales tax, so reporting less is normal, but you need a reconciliation that shows why (see yclcpa.com/1099k).
• Large Schedule C losses, especially year after year and offsetting wages, may lead the IRS to ask whether there's a real profit motive (the hobby loss rules) and to ask for proof of expenses.
• Cash businesses such as restaurants, retail, nail salons and contractors. Examiners often reconstruct income from bank deposits and personal spending.
• Foreign accounts and income: missing FBARs or Forms 8938, unreported interest or investment income from abroad. An unfiled international information return leaves the statute open.
• Other common questions: large charitable deductions, the earned income credit, vehicle and home office deductions, and money moving between a company and its owners.

It starts with a letter. The examiner sends a document request, you provide records and possibly sit for an interview, and the examiner proposes changes. Agree and the case closes. Disagree and you get a 30-day letter and can go to Appeals. If that doesn't settle it, or you don't respond, a 90-day notice of deficiency follows, and you have 90 days to petition Tax Court. Every missed deadline removes an option.

Description: Read top to bottom in time order; each row shows what happens, what you do and the deadline.

Step	What happens	What you do	Deadline
1. Audit letter	The IRS tells you which year and which items it selected	Sign Form 2848 with a representative; confirm the audit type, years and items	The reply date on the letter
2. Information Document Request (Form 4564)	The examiner lists what to provide: bank statements, invoices, books, contracts	Prepare item by item and provide only what's listed; ask for more time before the deadline if needed	Usually 2 to 4 weeks, per the IDR
3. Interview (office and field audits)	The examiner asks how the business works and how income and expenses are recorded	Your representative can attend for you; if you go, rehearse first; give 10 days' notice if you want to record it	As scheduled
4. Proposed changes (Form 4549 with 886-A)	The examiner lists adjustments, tax, penalties and interest	Check every item; talk to the examiner or the examiner's manager	The time the examiner allows
5. 30-day letter (Letter 525 or 950)	Formal notice of your right to appeal if you disagree	Sign and pay if you agree; file a written protest with Appeals if you don't	Generally 30 days
6. IRS Independent Office of Appeals	Separate from Exam; settles based on the hazards of litigation	$25,000 or less per period: small case request (Form 12203); more: formal written protest	Generally needs 365 days left on the statute
7. 90-day notice of deficiency (Letter 3219)	The statutory notice, also called the 90-day letter	If you disagree, petition Tax Court (no need to pay first)	90 days; 150 if addressed outside the U.S.; can't be extended
8. U.S. Tax Court	The court hears the case; most settle before trial	$50,000 or less per year can use the small case (S case) procedure; usually handled by an attorney	Per the court's schedule

• If you don't respond to the document request or the 30-day letter, the IRS decides on the information it has and issues the 90-day notice.
• The 90 days can't be extended. It's a statutory deadline. Miss it and you generally have to pay first, then claim a refund or sue in another court.
• Fast Track Settlement: while the case is still in Exam, you can ask for an Appeals employee to act as a neutral mediator, with a goal of resolving it within 60 days. Both sides have to agree.
• New evidence after the fact: if tax was assessed because records weren't provided, you can ask for audit reconsideration.

Example (hypothetical numbers, to show the method): a 2024 Schedule C goes through a correspondence audit, and the examiner disallows $30,000 of expenses because there are no invoices or payment records.

If bank records and invoices later support $18,000 of those expenses, the tax and penalty are recomputed on the remaining $12,000. The better the records, the smaller the adjustment.

The Taxpayer Bill of Rights in Publication 1 lists 10 rights, including the right to be informed, to challenge the IRS's position and be heard, to appeal to an independent forum and to retain representation. CPAs, EAs and attorneys can fully represent you on Form 2848; the examiner then works with your representative and you don't have to meet the examiner yourself. If you're stuck, the independent Taxpayer Advocate Service can help.

• Publication 1 lists the right to be informed, to quality service, to pay no more than the correct amount, to challenge the IRS and be heard, to appeal in an independent forum, to finality (knowing how long the IRS has), to privacy, to confidentiality, to retain representation and to a fair and just tax system.
• Publications 556 and 3498: Publication 556 covers exams, appeals and refund claims; Publication 3498 (Rev. 5-2025) walks through the audit itself, including mail and in-person exams, the 30-day letter, Appeals and the 90-day letter.
• Form 2848 authorizes a CPA, EA or attorney to deal with the examiner, submit records, attend interviews, negotiate and sign agreements within the scope you grant. On a joint return, each spouse signs a separate 2848.
• Form 8821 only lets someone see your tax information. It doesn't let them speak for you.
• You can pause an interview. If you go alone and decide you want advice, you can ask to stop and reschedule (unless you're there under a summons).
• Taxpayer Advocate Service (TAS) is an independent, free office inside the IRS. If normal channels haven't worked, you face financial hardship or the IRS has stalled, apply on Form 911. Low Income Taxpayer Clinics can also help eligible taxpayers.

The usual penalty is 20% of the underpayment (the accuracy-related penalty), for negligence or a substantial understatement (for individuals, generally more than the greater of 10% of the correct tax or $5,000). It rises to 40% for gross valuation misstatements and understatements tied to undisclosed foreign financial assets. Civil fraud is 75%. Interest runs from the original due date at a quarterly rate compounded daily; for individuals it's 7% in Q4 2026.

• Reasonable cause: if you acted in good faith with reasonable cause (for example, relying on a qualified professional, or a genuinely complex rule), you can ask to have the 20% removed. You need evidence, not just a statement.
• Interest generally can't be waived. It's statutory; abatement is possible only for unreasonable IRS errors or delays.
• Paying early cuts interest. You can pay amounts you know you'll owe while the audit is still open.

You can set up a payment plan. Individuals who owe less than $100,000 in combined tax, penalties and interest can get a short-term plan of up to 180 days online with no setup fee, and those who owe $50,000 or less can apply online for a long-term plan, generally up to 72 months. Penalties and interest keep running. If you truly can't pay, look at an offer in compromise.

• Businesses call the number on the notice (800-829-4933) or visit an IRS office.
• If you dispute part of it, you can pay the undisputed part. Once collection letters arrive (CP504, or a final notice of intent to levy), watch the 30-day window to request a hearing.

The most common mistakes are ignoring letters, missing deadlines, walking into an interview unprepared, changing books or creating documents after the fact, mailing originals, and handing over records that weren't requested. Everything you say and provide goes into the file, so it's better to go a little slower and check with your representative first.

• Don't ignore it. Silence just lets the IRS assess based on its own information.
• Don't alter books or create documents. After-the-fact invoices or changed records can turn an understatement into fraud. Real bank records, third-party confirmations and honestly reconstructed expense schedules are fine, with an explanation.
• Don't send originals. Send copies, keep your own set and keep a list of what you uploaded.
• Don't volunteer extra records. More than what was asked for can open new issues. Answer the IDR item by item.
• Don't go in unprepared. Walk through how the business runs and how income is recorded with your representative. Answer truthfully and briefly, and if you don't know, say so and follow up.
• Don't file an amended return in the middle of an audit on your own. If you find a new error, talk to your representative about how to raise it.
• Don't pay a caller or texter claiming to be the IRS. The IRS takes payment only to the United States Treasury.

Start with the letter number and the deadline, then find your situation below. If you're not sure which one it is, have a CPA or EA read the letter before you reply.

• Situation A: you got a CP2000. Match each 1099, 1099-K and 1099-B on the notice against your records. Take shipping, marketplace-collected sales tax and refunds out of 1099-K gross amounts, and add cost basis for stock sales. Sign and pay for what you agree with, and explain and document what you don't.
• Situation B: a correspondence audit. Prepare support for each listed item (invoices, payment records, donation receipts) and mail or upload copies. If you need more time, ask before the deadline.
• Situation C: an office or field audit appointment. Sign Form 2848 with a representative, confirm the years, items and document list, and reconcile the books, bank statements and return before setting the interview.
• Situation D: you already have a 30-day letter. Go through the proposed changes, decide whether to accept or appeal, and use a small case request at $25,000 or less per period or a formal protest above that. Check that enough time is left on the statute.
• Situation E: you already have a 90-day notice. Work out the last day of the 90 (or 150) days right away. To fight it, petition Tax Court in time, usually with an attorney. If you agree, pay or set up a plan.
• Situation F: a call or text says you owe the IRS. Don't pay, don't click and don't share information. Check your IRS account yourself and report it to TIGTA if needed.