How Does an IRS Field Audit Work?

The IRS conducts the field audit procedure through the following steps. Let’s understand each of them, which are as follows:

The IRS Starts the Field Audit by Sending a Letter

A field audit generally begins with an official IRS letter telling you that your tax return has been selected for examination.

The IRS may use different letters depending on the type of taxpayer and examination. For example, Letter 2205-A is commonly used for certain individual field examinations.

https://www.taxaudit.com/audit-defense/resources/sample-audit-notices/irs-notices/irs-audit-letter-2205-a-sample-1

The initial letter generally tells you the following:

• Which tax year or years are being examined;
• Which issues the IRS plans to review;
• The name and contact information of the Revenue Agent assigned to the audit;
• How to contact the agent; and
• How to arrange the initial meeting.
• The letter also explains your taxpayer rights and may indicate which records the IRS will need.

The IRS may later send you Form 4564, Information Document Request (IDR). This form provides a more detailed list of the documents and information the Revenue Agent wants to review.

How the IRS Contacts You If You Live Outside the United States?

The IRS uses the concept of a “last known address” for certain important tax notices. This also applies to taxpayers living outside the United States.

In simple terms, this is generally the address the IRS has on record for you. It is usually the address shown on your most recently filed and properly processed federal tax return, unless you have properly notified the IRS of a new address.

For example, suppose you previously lived in the United States but later moved to Canada.

If you properly update your address with the IRS, the IRS can send correspondence to your Canadian address.

If you do not update your address, the IRS may continue sending letters to your old U.S. address.

You could therefore miss an important IRS notice and a critical deadline.

This is especially important if the audit eventually results in a Notice of Deficiency, because that notice sets a strict deadline to file in Tax Court.

Next, let’s understand how the IRS audits international taxpayers outside the United States through field audits.