Identify the audit and response date
We check the Letter, tax periods, issues and documents the examiner requested.
The IRS wants to examine your return
We review the audit Letter, organize the requested records and represent you before the IRS within the agreed scope.
How it works
Organize the supporting records
We compare your evidence with the return and explain any missing records or disputed items.
Respond and review the findings
With engagement and Form 2848 in place, we communicate with the examiner and explain agreement, Appeals or reconsideration options.
Which sounds like you?
Which kind of audit is it?
- Mail (correspondence): a centralized unit generally requests documents for one or two items, often through Letter 566.
- Office: a Tax Auditor at a local IRS office generally uses Letter 915 and an Information Document Request (IDR) to arrange an interview about several items on a less complex return.
- Field: a Revenue Agent uses an appointment Letter and Form 4564 IDR for an in-person examination at your office or your representative's office, potentially covering multiple complex business issues and meetings.
CP2000 is different: the Automated Underreporter (AUR) program compares third-party Forms W-2 and 1099 and Schedules K-1 with your return. It is not a formal audit, but typically asks for a response within 30 days and can lead to CP3219A, a Notice of Deficiency carrying petition rights under IRC §6213(a). A wage and income transcript helps check the information the IRS received.
Your right to representation
You may represent yourself or appoint an attorney, CPA or IRS Enrolled Agent under Circular 230. Form 2848, Power of Attorney, lets us speak for you on the tax matters and periods you authorize. Once it is on file, the IRS generally communicates through the representative.
Under IRC §7521(c), the IRS generally cannot require you to attend an interview with your representative unless it issues an administrative summons. Review requested records and questions before responding, and do not guess when information is missing. Potential criminal issues call for advice from an attorney.
A well-documented, single-issue mail audit may be manageable without paid representation. Office or field audits and missing records may call for professional review. Our IRS administrative representation does not imply Tax Court admission; Tax Court–admitted counsel handles court representation.
What the IRS may examine
IRC §7602(a) lets the IRS examine relevant books, papers, records and testimony and issue a summons, a formal demand for records or testimony. United States v. Powell, 379 U.S. 48 (1964), requires a legitimate purpose, relevant information not already possessed and compliance with administrative steps for summons enforcement. A taxpayer may challenge a missing requirement, assert privilege or show improper purpose.
IRC §7602(c), as amended by the Taxpayer First Act of 2019, Pub. L. 116-25, §1206, generally requires 45 days' advance notice through Letter 3164 before third-party contacts such as banks, customers, employers or vendors. That period gives you an opportunity to provide the requested information directly. It does not guarantee that third-party contact will be avoided.
IRC §7602(d) restricts summons authority after a Department of Justice (DOJ) referral for criminal prosecution. The civil examination process cannot be used to bypass those protections. Whether a referral exists needs case-specific review.
Records and the burden of proof
Tax Court Rule 142(a) generally places the burden of proof, the responsibility to support a disputed position, on the taxpayer. IRC §6001 and Treas. Reg. §1.6001-1 require records supporting income, deductions and credits. IRM 4.10 describes IRS examination procedures.
IRC §7491(a), enacted in the IRS Restructuring and Reform Act of 1998 (RRA 1998), may shift the burden in court proceedings if all four conditions below are met. Corporations, partnerships and trusts also must have a net worth of $7 million or less. Failing to cooperate during examination can prevent use of this rule at trial.
- Introduce credible evidence on the factual issue.
- Meet substantiation requirements, including IRC §274(d), by supplying the required proof.
- Maintain records required under IRC §6001.
- Cooperate with reasonable IRS requests for witnesses, information, documents, meetings and interviews.
When receipts are missing
Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), allows a court to estimate some deductible expenses when the expense is proven but the exact amount is not. Villa v. Commissioner, T.C. Memo. 2023-155, and Alvarado v. Commissioner, T.C. Memo. 2024-1, address this rule. Reconstruct records from secondary sources before relying on estimation.
“Absolute certainty in such matters is usually impossible and is not necessary; the Board should make as close an approximation as it can, bearing heavily, if it chooses, upon the taxpayer whose inexactitude is of his own making.” — Judge Learned Hand, Cohan
- You must first prove the expense actually occurred; estimation does not establish its existence.
- IRC §274(d) requires strict records for travel away from home, including related meals and lodging, entertainment, business gifts and listed property such as passenger automobiles; Cohan does not replace those requirements.
- Estimation is discretionary, and poor records may lead to lower allowed amounts rather than the deduction claimed.
Proposed changes and response options
Letter 525, often called the 30-day Letter, presents proposed adjustments; Letter 950 serves a similar function when agreement is not reached in an office or field examination. Documents may include Form 4549, the examination changes; Form 886-A, the explanation; and Form 870, a waiver of restrictions on assessment. Review what each document does before signing.
You generally have 30 days to agree or submit an Appeals protest, which may use Form 12203 where applicable. Without a timely response, the IRS may issue a Notice of Deficiency under IRC §6212. A no-change finding, agreement or disputed determination depends on the evidence and applicable law; none is promised.
The statute of limitations (SOL), the usual deadline to assess additional tax, is three years from filing under IRC §6501(a). Exceptions include six years for omissions exceeding 25% of gross income under IRC §6501(e), no limit for fraudulent returns under IRC §6501(c)(1) or failure to file under IRC §6501(c)(3), and an agreed extension under IRC §6501(c)(4) using Form 872. Consider the evidence and consequences before agreeing to an extension.
If the audit is already closed
Missing the 30-day Letter 525 response or a Tax Court petition deadline may leave an assessed balance, but IRM 4.13 provides an audit reconsideration process. It generally requires new information not previously considered, evidence the determination was wrong and unpaid tax remaining. Reconsideration is discretionary, not a statutory right.
Send a written request and supporting evidence to the address on the most recent IRS notice. If reconsideration is denied, an offer in compromise based on doubt as to liability under IRC §7122, using Form 656-L, may be another route to review. That request asks the IRS to consider whether the tax is correctly owed, not merely whether you can afford it.
Fees and engagement
Free — Free Notice Decoder / free path. The free decoder explains your notice from its type and date. No documents are uploaded at the free step. $97 — Notice Review. Send us your IRS notice along with your own transcripts. We tell you what the notice is, what it means, and what the issues appear to be at a high level. This is information, not tax advice. $497 — Case Analysis. We pull your transcripts, analyze your whole situation, and give you a written do-it-yourself plan. $1,000 — Representation. Power of attorney (Form 2848) and we represent you before the IRS. Flat $1,000. The $97 Notice Review is credited toward the $497 Case Analysis. Fixed fees, confirmed in writing before work begins. Not a guarantee of any IRS outcome. We never charge a percentage of tax saved.
- Notice Review
- $97
- Case Analysis
- Case Analysis: $497
- Resolution work
- Fixed by work type and amount owed
- Representation (Form 2848)
- $1,000
Case Analysis is $497 regardless of balance owed, tax years, complexity or urgency. The $97 Notice Review is credited toward the $497 Case Analysis. Phase 2 work is priced in the published ranges on our IRS fee page, or quoted in writing after the Case Analysis. Fixed fees, confirmed in writing before work begins. Not a guarantee of any IRS outcome. We never charge a percentage of tax saved.
The engagement letter is the controlling document; no specific outcome or timeline is guaranteed. Audit outcomes depend on substantiation, applicable law, and IRS examination procedures. Texas CPAs are bound by the rules of the Texas State Board of Public Accountancy.
Common questions
Should I respond to the audit letter myself or hire representation?
For correspondence audits with full documentation, self-representation can work.
For office audits, field examinations, audits with substantiation gaps, or audits with potential criminal interest, professional representation is the procedurally sound choice.
Filing Form 2848 transfers communication to the representative — the IRS may not contact the taxpayer directly without the representative's consent.
What is the difference between Letter 525 and Letter 950?
Letter 525 (the '30-day letter') is issued at the conclusion of an examination with proposed adjustments.
Letter 950 serves a similar function in office and field examinations where the examiner and taxpayer cannot reach agreement.
The taxpayer has 30 days to either agree (Form 4549) or protest to Appeals (Form 12203).
If neither is timely addressed, the IRS issues a Notice of Deficiency under IRC §6212.
Can the IRS audit me beyond three years?
The default SOL is three years from the return's filing date under IRC §6501(a).
Key exceptions: six-year SOL under §6501(e) for omissions exceeding 25% of gross income; no SOL for fraudulent returns under §6501(c)(1) or failure to file under §6501(c)(3); and extension by agreement under §6501(c)(4) via Form 872.
What if I don't have receipts to substantiate my deductions?
The Cohan rule (Cohan v.
Commissioner, 39 F.2d 540, 2d Cir. 1930) allows courts to estimate deduction amounts where the expense existed but cannot be precisely documented.
Critical limitations: (1) Cohan does not apply to travel, meals, entertainment, gifts, or listed property — IRC §274(d) strict substantiation overrides Cohan; (2) the taxpayer must still prove the expense existed; (3) courts 'bear heavily' upon taxpayers with poor records.
When does the burden of proof shift to the IRS?
Under IRC §7491(a), the burden shifts when the taxpayer: (1) introduces credible evidence on the factual issue; (2) complies with all substantiation requirements; (3) maintains all records required by the Code; and (4) cooperated with reasonable IRS requests for witnesses, information, and documents.
All four conditions must be met.
What is a CP2000 and is it actually an audit?
CP2000 is issued by the IRS Automated Underreporter program when third-party information returns don't match the taxpayer's return.
It is technically not a formal audit — but has audit-like procedural consequences.
The taxpayer has 30 days to respond.
If unaddressed, CP2000 escalates to CP3219A (Notice of Deficiency) with Tax Court petition rights under IRC §6213(a).
Sources and representative
Ebot Mbi, CPA, EA · Texas CPA #127163, issued by the Texas State Board of Public Accountancy · IRS Enrolled Agent under Circular 230, authorized by the U.S. Department of the Treasury. Office: 4425 W Airport Fwy, Ste 595, Irving, TX 75062.