What Is a Correspondence Audit?

A correspondence audit is a tax examination conducted entirely through the mail or via digital document uploads rather than in-person meetings. It is the most common type of IRS audit, where the agency requests specific information or documentation to verify a part of your tax return.

1. Meaning of “ Correspondence audit ”

In plain English, a correspondence audit is an “audit by mail.” It is usually narrow in scope, focusing on one or two specific items on your tax return, such as charitable donations, business expenses, or eligibility for a certain tax credit. Instead of an agent coming to your home or office, they send you a letter explaining what they need to see, and you send your proof back to them.

2. Why “ Correspondence audit ” Matters

Taxpayers should care because this is the most likely way you will ever interact with the IRS audit department. Because it is handled via mail, it can feel less intimidating than an in-person review, but it is just as legally binding. If you handle it correctly and provide the right documentation, it can be resolved quickly. If you ignore it, the IRS can automatically change your return, resulting in a higher tax bill, penalties, and interest.

3. How “ Correspondence audit ” Works

The process is generally straightforward and follows these steps:

The Letter: You receive a notice in the mail (usually a Letter 566) stating that your return has been selected for examination.
The Request: The letter will list the specific items being questioned and the documents needed to prove them (e.g., bank statements, receipts, or canceled checks).
Your Response: You gather your records and mail them back or upload them using a secure IRS portal.
The Review: An IRS examiner reviews your documents. They may accept them as-is, ask for more info, or propose changes to your tax bill.
The Conclusion: If the IRS accepts your proof, they send a “no change” letter. If they propose changes you agree with, you sign and pay. If you disagree, you can appeal the decision.

4. Simple Example of “ Correspondence audit ”

Imagine a taxpayer who claimed a $5,000 deduction for “non-cash charitable contributions” after donating furniture and clothes to a local shelter. The IRS sends a letter requesting proof of the donation and how the value was determined. The taxpayer sends back the receipt from the shelter and a list of the items with their estimated values. The IRS reviews the mail, finds it satisfactory, and sends a letter stating the audit is closed with no changes.

5. Who Is Affected by “ Correspondence audit ”?

This type of audit primarily affects individuals and small entities, including:

Individual Taxpayers: Especially those claiming specific credits like the Earned Income Tax Credit (EITC).
Employees: Who may have large unreimbursed expenses or unusual deductions.
Freelancers and Gig Workers: Whose business expenses on Schedule C might need verification.
Small Business Owners: Regarding specific line items like travel or meal expenses.
Investors: If a specific stock sale or capital loss needs documentation.

6. Common Mistakes Related to “ Correspondence audit ”

Ignoring the Letter: Assuming it’s a mistake or that it will go away. This leads to the IRS automatically disallowing your deductions.
Sending Original Documents: Always send copies. The IRS can lose paperwork, and you need to keep your originals for your own records.
Missing the Deadline: Most notices give you 30 days to respond. If you need more time, you must ask for it.
Being Unorganized: Sending a “shoebox” of random papers. It is better to provide a summary sheet and clearly labeled copies of your receipts.
Answering More Than Asked: Only provide documentation for the specific items mentioned in the letter.

7. Forms Related to “ Correspondence audit ”

While there are no forms you file to start this process, you will likely encounter these:

Letter 566: The initial letter informing you of the correspondence audit.
Letter 525: The “30-day letter” showing proposed changes if the IRS doesn’t fully accept your initial response.
Form 2848: Power of Attorney, if you want a tax professional to handle the correspondence for you.

8. “ Correspondence audit ” vs. Related Terms

Field Audit: A field audit involves an IRS agent coming to your home or place of business for a comprehensive review. A correspondence audit is much smaller and handled by mail.
Office Audit: This requires you to go to an IRS office to meet with an auditor. It is more personal than a correspondence audit but less intrusive than a field audit.
CP2000 Notice: Often called a “mini-audit,” this is actually a mismatch notice where the IRS computer sees that a 1099 or W-2 doesn’t match your return. A correspondence audit is a manual review of your underlying records.

9. Related Glossary Terms

10. FAQs About “ Correspondence audit ”

How long does a correspondence audit take?
It typically takes 3 to 6 months from the time you send your first response, depending on how quickly the IRS examiner reviews your mail.

Do I need to hire a CPA for a correspondence audit?
Not necessarily. If the request is simple (like proving a donation), you can often handle it yourself. However, if the amounts are large or the tax law is complex, professional help is recommended.

Can I call the person auditing me?
The letter will usually include a phone number or an extension for a specific department. However, most of the “conversation” must happen in writing.

What if I lost my receipts?
You can try to provide alternative proof, such as bank statements, credit card logs, or even a letter from the person or organization you paid. The IRS has the final say on whether they accept alternative proof.

Is a correspondence audit common?
Yes. Approximately 70% to 80% of all IRS audits are conducted via correspondence.

11. Final Takeaway

A correspondence audit is the IRS’s way of verifying your return as efficiently as possible. While getting a letter from the IRS is never fun, this type of audit is usually limited to just a few items. The key to a successful outcome is to stay calm, gather your copies, organize them clearly, and respond within the timeframe listed on the notice. Being proactive and organized is the best way to prove your return is accurate and put the audit behind you.

12. Disclaimer: This article is for general educational purposes only and should not be considered tax, legal, or financial advice. Tax rules can change, and your situation may be different. Consider consulting a qualified tax professional before making tax decisions. Verification of current rates, limits, and deadlines should be done for the current tax year.

What Is “ Correspondence audit ”?