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IRS & state audits

An audit notice is unsettling even when your return is right. Here is what to expect, and why you should not face it alone.

Summary

If you are being audited, the most important step is to not respond off the cuff. Get representation, because what you say and hand over defines the scope.

Most audits are correspondence audits handled entirely by mail. With an Enrolled Agent representing you, the IRS communicates with us, not you, and we keep the examination limited to what is actually at issue.

What triggers an IRS audit, and what happens?

An audit is the IRS verifying that the income, deductions, and credits on your return are correct. It can be triggered by a computer-scored mismatch, a random selection, or a specific item that stands out. A notice is not an accusation, but it does carry deadlines and consequences.

The scope is set early, largely by how you respond. A careful, complete response keeps the audit narrow. An off-the-cuff answer or the wrong document can widen it into other years and issues.

What are the types of audits?

  • Correspondence audit: the most common, handled entirely by mail. The IRS requests documentation for specific items.
  • Office audit: you (or your representative) meet an IRS examiner at a local office to review records.
  • Field audit: the most thorough, where an IRS agent examines records in person, often for businesses or complex returns.

In every one of these, you have the right to be represented, and in most you never need to speak to the auditor directly.

What should I do if I am audited?

The instinct to explain everything is the instinct to resist. Instead:

  • Do not ignore the notice. Every audit has a firm response deadline.
  • Do not send more than what is asked. Volunteering documents can expand the scope.
  • Do get representation before you respond, so the strategy is set from the first contact.

Anything you say can widen the audit. Casual answers, extra documents, and guesses are how a one-issue audit becomes a multi-year examination. Let a representative frame the response.

At a glance: IRS & state audits
What it is
An IRS or state review of items on your tax return
Types
Correspondence (by mail), office, and field audits
Time limit
The IRS generally has 3 years to audit a return (6 if income is understated by 25%+)
Your right
To be represented, so you never meet the auditor yourself
If you disagree
You have formal appeal and reconsideration rights

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How Rockwater resolves it

The same three-stage approach, applied to your case.

01

We take over the exam

We file representation so the auditor communicates with us, and we manage every information request and deadline.

02

We present your position

We organize the documentation, respond precisely to what is requested, and keep the examination limited to the issues actually raised.

03

We protect your appeal rights

If the result is not right, we pursue appeals and reconsideration to get to the correct outcome.

IRS & state audits: frequently asked questions

How far back can the IRS audit me?

Generally three years from when you filed. That extends to six years if income was understated by more than 25%, and there is no limit for a fraudulent or unfiled return. We confirm which years are actually open.

Do I have to meet with the IRS auditor myself?

In most cases, no. Once we represent you, we handle the communication and any meetings, so you do not face the auditor directly. This alone removes much of the stress and risk.

What triggers an IRS audit?

Common triggers include income that does not match third-party reporting, unusually large deductions relative to income, certain credits, and random selection. A trigger is not a verdict; it is a review, and it can be managed.

What happens if I ignore an audit notice?

The IRS can proceed without your input and assess additional tax, penalties, and interest based on its own findings, which are rarely in your favor. Responding, through a representative, protects your position.

Can you help if I already started the audit myself?

Yes. We can step in at any stage, take over communication, and often contain an examination that has started to expand. The sooner we are involved, the more we can protect.

Does this cover state audits too?

Yes. We represent clients in California FTB and CDTFA examinations as well as IRS audits, and coordinate them where both are underway.

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