Received an IRS Audit Letter? Letter 566, Office vs. Field Audits, Form 2848 and Appeal Deadlines

The short answer

An IRS audit (examination) always starts with a letter in the mail. The IRS does not open an audit by phone, e-mail or text. A correspondence audit usually begins with a Letter 566-series notice and must be answered by the date printed on it; in-person audits are either office audits at an IRS office or field audits at your home, business or representative's office. You can sign Form 2848 so a CPA represents you, appeal under Publication 5 if you disagree, and petition the U.S. Tax Court within 90 days of a Notice of Deficiency. Generally the IRS has 3 years from filing to assess more tax, or 6 years if you left out more than 25% of the gross income shown on the return.

Who this applies to

Anyone who receives an IRS letter that says "examination" or "selected for examination," or that asks for receipts, bank statements or contracts.

In practice we see audits most often for cash-heavy small businesses such as restaurants, nail salons and retail shops; side businesses with several years of Schedule C losses; families claiming large charitable gifts, vehicle expenses or rental losses; refundable credits such as the EITC; new immigrants and green card holders reporting foreign income and accounts for the first time; and U.S. companies owned from China with large related-party payments.

It also applies if someone claiming to be the IRS has called or e-mailed you; verify that contact first.

How to tell whether the letter is real

Check the channel and the letter number, then verify through official IRS channels rather than the phone number in a suspicious message.

Channel. The IRS says it notifies you of an audit by mail and will not initiate an audit by telephone. An examiner may call to schedule or discuss items only after first notifying you in writing. A caller demanding gift cards, prepaid cards or wire transfers is not the IRS; IRS payments go to the "United States Treasury."

Letter number. Correspondence audits commonly start with a Letter 566-series notice (566-B, 566-D, 566-S and others) or Letter 2202-B. The letter number, tax year, contact number and response date appear near the top. In-person audits usually start with a letter asking you to call for an appointment, commonly Letter 2205-A or Letter 3572, often with Form 4564, an Information Document Request.

Verify it yourself. Log in to your IRS Online Account. The IRS says that if your letter lists 866-897-0177 or 866-897-0161, you can see the audit status under "Records and Status." You can also call a number published on IRS.gov, or have your CPA check.

In-person visits. IRS employees carry two forms of official credentials, a pocket commission and an HSPD-12 card, and will give you a dedicated IRS number to verify their identity.

The three kinds of audit and the timeline

The IRS chooses the method; scope ranges from one or two items by mail to a full review of a business.

Correspondence audit

The most common type. Everything happens by mail, fax or upload, usually on one or two items. The IRS can ordinarily grant a one-time automatic 30-day extension. If you miss the deadline, the IRS issues a report disallowing the items in question.

Office audit

An interview at a local IRS office, usually covering several items such as Schedule C income and expenses or rental activity. You call to schedule by the date in the letter.

Field audit

The examiner comes to your home, business or representative's office. Field audits are the broadest and may cover several years and bank deposit analysis.

Typical sequence

Initial letter, then your response or appointment, then document requests and questions, then the examiner's report. If you agree, you sign and pay or receive a refund. If not, you usually receive a "30-day letter" and can talk with the examiner or a manager, then request Appeals. If the case is still unresolved, the IRS issues a Notice of Deficiency (the "90-day letter"): you have 90 days, or 150 days if addressed outside the U.S., to petition the Tax Court, and that period cannot be extended.

Your rights: representation, recording and appeal

You can be represented, you can appeal, and several deadlines cannot be fixed once missed.

Form 2848. An attorney, CPA or enrolled agent can deal with the examiner and attend interviews for you. Publication 556 says that if you ask to consult a representative during an interview, the IRS generally must suspend it and reschedule, unless you are there under an administrative summons.

Recording. You may record an interview if you ask in writing 10 days in advance and bring your own equipment.

Appeals. Under Publication 5, if the tax and penalties for each period are $25,000 or less, you may file a small case request (Form 12203 or a brief written statement). If any period exceeds $25,000, or the case involves a partnership or S corporation, you need a formal written protest. Give the examiner everything requested first; new information raised in Appeals may be sent back to Exam.

Statute of limitations (IRC §6501). Generally 3 years from the later of the filing date or due date. It becomes 6 years if omitted gross income exceeds 25% of the gross income stated on the return. There is no limit for fraud or for a return never filed, and if certain international information returns such as Form 5471 were not filed, the period for the related tax does not start to run. The IRS may ask you to sign Form 872 to extend the period; you can refuse or limit it, so talk to your representative first.

What records to gather

Income: W-2s, 1099s including 1099-K, bank and payment-app statements, POS reports, cash receipt logs.

Expenses: invoices, receipts, contracts and proof of payment; a vehicle mileage log; home office measurements and use.

Deductions and credits: written acknowledgments for any single gift of $250 or more, mortgage interest and property tax statements, child care records, proof a child lived with you.

Businesses: general ledger, bank reconciliations, payroll records and Forms 941, shareholder loan accounts, loan agreements.

How to send: answer only the items listed; send copies, not originals; put your name and taxpayer ID on every page; keep proof of mailing or upload.

A simple example

Simplified: ignores state tax, interest, the deduction for half of self-employment tax and the QBI deduction.

Mr. Wang runs a nail salon and reported $180,000 of receipts and $120,000 of expenses on his 2024 Schedule C. In October 2026 he receives Letter 566 asking him to support $40,000 of contract labor.

He can document only $25,000. The disallowed $15,000 becomes extra self-employment income: roughly $3,300 of income tax at 22%, plus about $2,100 of self-employment tax ($15,000 x 92.35% x 15.3%), about $5,400 in total. If a 20% accuracy-related penalty also applies, add about $1,080, plus interest.

If he sends bank transfer records, a payee list and the Forms 1099-NEC he issued before the deadline, the disallowed amount may shrink. Because each period is under $25,000, a small case request is available if he disagrees.

Common mistakes

Ignoring the letter. After the deadline the IRS disallows the items and moves toward a deficiency notice and collection.

Sending everything you have. Extra documents can raise new questions. Answer the items listed.

Going to the interview alone to "explain." What you say is noted in the file. For cash businesses or messy books, it is usually safer for a representative to attend.

Treating a phone call or e-mail as an audit notice. The IRS does not start audits that way. Verify first.

Signing Form 872 or other consents without reading them. Know which years and issues are extended and how the consent affects your appeal rights.

What to do and when

The day the letter arrives: note the letter number, tax year, issues and deadline; verify through your IRS Online Account or your representative.

Within the first week: sign Form 2848; if you need more time, ask before the deadline (one 30-day extension is usually available for mail audits).

Before the response date: organize and send the documents, or call to schedule the interview.

After the report or 30-day letter: decide by the stated date whether to agree, add information or request Appeals.

After a Notice of Deficiency: decide within 90 days (150 if outside the U.S.) whether to petition the Tax Court.

After closing: check later years for the same issue.

How YCL can help

We represent individuals, families and small businesses in IRS correspondence, office and field audits: confirming the letter is genuine, filing Form 2848, preparing the response package, dealing with the examiner, and preparing appeals when we disagree with the result. See our IRS audit representation service.

For the full process, see our guide: Responding to an IRS audit. For state audits such as North Carolina NCDOR, see the state tax audit guide.

YCL Accounting & Consulting is a multi-state CPA firm serving clients across the U.S. in English and Chinese, led by co-founder Gloria (Chenchen) Liu, CPA. You can start with a free 15-minute consultation.

Sources

IRS: IRS audits

Taxpayer Advocate Service: Letter 566 series, audit notice with request for information

IRS: How to know it's really the IRS calling or knocking on your door

IRS Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund

IRS Publication 5, Your Appeal Rights and How to Prepare a Protest If You Disagree

IRS: About Form 2848, Power of Attorney and Declaration of Representative

26 U.S. Code § 6501, Limitations on assessment and collection (Cornell LII)

Last checked: November 4, 2026

This article is general tax information, not tax, legal or investment advice for any individual situation.