The Office (or Desk) Audit is an in-person interview and review of the taxpayer's records and is usually done at a local IRS office. Most audits of individual returns (except for the self-employed) are office audits because the returns are not as complex. Often these audits will only cover a few specific issues which the IRS outlines in the notice they send. For example, the examining agent may only be interested in seeing proof for travel expense deductions or educational expenses. Audits of business returns, especially for self-employed individuals, are often done at the taxpayer's place of business and are more involved. These are termed "field audits" because from the IRS perspective they are done "out in the field" as opposed to being done in their office.
The audit notification letter explains which records will be needed. After an office audit is scheduled, you need to review your return, examine the items the IRS questioned in the notification letter, and organize your records accordingly. You should only bring records that are related to the items questioned in the IRS letter. Do not volunteer additional unrelated records, as they may indicate new areas for investigation.
Taxpayers can act on their own behalf or have someone represent or accompany them. If the taxpayer is not present, the representative must have proper written authorization on Form 2848 Power of Attorney and Declaration of Representative. The auditor will explain the reason for any proposed changes. Most taxpayers agree to the changes and the audit ends at that level.
Appeal rights are explained by the examiner at the beginning of each audit. Taxpayers who do not agree with the proposed changes may appeal by having a supervisory conference with the examiner's manager, or appeal their case administratively within the IRS to the U.S. Tax Court, U.S. Claims Court, or the local U.S. District Court. If there is no agreement at the closing conference with the examiner or the examiner's manager, the taxpayer has 30 days to consider the proposed adjustments and the next course of action. If the taxpayer does not respond within 30 days, the IRS issues a statutory notice of deficiency, which gives the taxpayer 90 days to file a petition to the Tax Court. The Claims Court and District Court generally do not hear tax cases until after the tax is paid and administrative refund claims have been denied by the IRS. The tax does not have to be paid to appeal within the IRS or to the Tax Court. A case may be further appealed to the U.S. Court of Appeals or to the Supreme Court, if those courts accept the case.
Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.