Correspondence Audits: How an IRS Audit by Mail Works

A correspondence audit is an IRS exam conducted entirely through the mail. No office visit. No revenue agent at your kitchen table. A tax examiner at an IRS campus sends you a letter, tells you which items on your return are in question, and asks for proof.

That sounds easy. It is not always easy. A correspondence exam is decided almost entirely on what you send. There is no conversation where you can explain the context. If the documents do not make the point on their own, you lose the point.

Who gets a mail audit

Correspondence exams are built for narrow issues on simpler returns. The Internal Revenue Manual says returns flagged "CORR" are certain individual low and medium income non-business returns that are conducive to correspondence examinations, and they are ordered at a national level (IRM 4.1.2.6.2).

The typical issues are things that can be proved or disproved with a document: a dependency claim, the earned income tax credit, education credits, itemized deductions, a single deduction that looked large for the income reported. If your return has a complicated business, the IRS usually sends it to an office or field examiner instead. See how the IRS selects returns for audit for the bigger picture.

The initial contact letter

The campus exam manual gives examiners two ways to open the case (IRM 4.19.13.8):

• Request information only. The examiner sends an initial contact letter, such as Letter 566-S, explaining the issues and listing what you need to send.
• Propose changes right away. The examiner sends a letter with Form 4549, Income Tax Examination Changes, showing the adjustments the IRS will make unless you prove otherwise.

Either way, read the whole letter twice. It tells you the tax year, the specific items under review, the response date and how to send your reply. Write the response date on your calendar. Then write it on a second calendar.

How long you have to answer

The IRM sets standard suspense periods, meaning how long the examiner waits before moving to the next step (IRM 4.19.13.2.4). The response date printed on your letter controls, but here is how the internal clock runs:

Letter	Standard suspense period
Initial contact letter without a report (EITC and most Taxpayer Services cases)	30 days
SB/SE initial contact letter without a report	45 days
30-day letter with a report	45 days
Initial letter combined with a report (45-day letter)	60 days
Letter 692-M response on your documents	30 days

The cushion between your response date and the suspense period exists for mail time. Do not plan around it. Plan around the date on the letter.

Need more time? Ask once, in writing, early

The IRM is generous on a first request. If you ask for more time to send documents, the campus automatically grants an additional 30 days on the first request, measured from the original response date on Letter 566-S or Letter 525 (IRM 4.19.13.11.7).

There are two big exceptions. First, if 180 days or less remain on the assessment statute, the IRS will not grant the extension unless you agree to extend the statute and the facts warrant it. Second, once a notice of deficiency has been issued, an extension to send documents does not extend your deadline to petition the Tax Court. That second rule has cost people their day in court. Do not let it cost you yours.

Second and later extensions are judgment calls by the examiner. Have a reason, and make it a real one.

What a good response looks like

Examiners at a campus work a lot of cases. Make yours easy to decide.

1. Answer every item listed. If the letter asks about three items, address all three, even if one is simply "agreed."
2. Send copies, never originals. Keep a complete copy of everything you send, page for page, in the order you sent it.
3. Write a short cover letter. One page. Name each item, state your position and list the exhibits that prove it. Use the reply cover sheet the IRS includes if one is enclosed.
4. Label the exhibits. Put your name, the last four digits of your SSN and the tax year on every page. Loose pages get separated.
5. Show the math. If 47 receipts add up to the deduction, include a one-page schedule that totals them.
6. Keep proof of mailing or transmission. Certified mail receipts and fax confirmations are cheap insurance.

For more on organizing documents, see what records the IRS can require and what to do when records are missing.

What happens after you reply

The examiner evaluates your documents. The manual says every effort must be made to respond within 30 days of receiving your reply, and if the IRS needs more time, an interim notice (CP 3500) goes out telling you when to expect an answer. During busy periods, those interim dates can stretch a long way.

If the examiner accepts some of your proof and rejects the rest, you will typically get a Letter 692-M or 692-T with a revised report explaining the additional findings. That letter is a second chance. Read the explanation of what was rejected and why, and fix the gap if you can.

If you do not respond

Silence does not make the audit go away. It makes it go faster, and not in your favor. IRM 4.19.13.13 lays out the sequence:

• No response to the initial contact letter: the IRS issues Letter 525, the general 30-day letter, with a proposed examination report, Form 886-A explaining the disallowed items, and Publication 3498-A, The Examination Process (Audits by Mail).
• No response to the 30-day letter: the IRS issues Letter 3219, the statutory notice of deficiency.
• No response to the notice of deficiency: after the suspense period, the case closes as a default and the tax is assessed.

The notice of deficiency gives you 90 days to petition the U.S. Tax Court, or 150 days if the notice is addressed to you outside the United States. That deadline cannot be extended.

If the tax gets assessed by default and you later find the proof, the door is not completely closed. Audit reconsideration exists for exactly that situation. But it is a harder road than answering the first letter.

When the paper is not enough: asking for a face-to-face exam

The IRS audit page says that if you have too many records to mail, you can request a face-to-face audit. The campus manual treats that as a transfer request to an Area Office (IRM 4.19.13.16). Expect the examiner to ask why first, and to try to resolve the case at the campus.

If you claim the records are too voluminous, the examiner may ask for an itemized list and then request a sample. If sampling is not workable, the transfer can be approved with a manager's sign-off. Transfers also need enough time left on the statute, which can mean signing a consent to extend it. Read more in how to change where your audit takes place.

Should you handle a mail audit yourself?

Many people do, and many succeed when the issue is simple and the documents exist. A dependency question with school and medical records showing the child lived with you is a document exercise.

Get help when the stakes or the complexity rise: multiple years, business expenses, missing records, a proposed penalty, or a 30-day letter you already ignored. Also get help if the examiner's letters keep saying your documents are "insufficient" without explaining why. That usually means you are proving the wrong fact.

The mail audit is the most forgiving exam the IRS runs. Answer on time, answer completely, and most of them end with a letter you can file away.