How Long Does an IRS Audit Take?

Does the thought of being audited make you want to hide under a rock? According to the IRS, audits are a major source of “concern, confusion and controversy” for taxpayers.

There’s one point of confusion we can clear up straight away: if you find yourself in the midst of an IRS audit, it won’t last forever. Yes, some audits can take a year or more to complete, but most are finished within a few months, and a simple audit can even be completed in a matter of days.

A former Internal Revenue Agent for the IRS, who was granted permission to be quoted anonymously, says that most of his cases lasted 4-6 weeks. That time frame typically included lots of waiting, due to scheduling conflicts and the taxpayer taking time to gather records.

“Some cases can be open and shut in a few hours,” he explains, “while some drag on for months depending on the complexity, scope and how organized the data is.”

How Long Different Types of IRS Audits Typically Take

The IRS conducts different types of audits to determine if you’ve filed your taxes correctly, and the timeframe from start to finish can vary by audit type. Here’s an overview:

Correspondence Audits

Some IRS audits can be completed by correspondence, meaning by mail. If you’re audited this way, the entire process will likely be resolved within a couple of months or less, and it will go something like this:

1. Receive an audit letter from the IRS.
2. You have 30 days to send your response with the requested documents.
3. The IRS has up to 30 days to review your information.
4. Your auditor will either request follow-up details, accept your tax return as it was originally submitted, or propose an adjustment.
5. If you disagree with the decision, you can petition the U.S. Tax Court within 90 days.
6. If you are still due a refund, you will receive it in 6-8 weeks.

In terms of the IRS’s decision, your auditor may communicate with you to ensure you understand their conclusion.

“We always wanted to over-communicate and close our cases as agreed,” the former Internal Revenue Agent says. “We would over-explain our findings to help ensure it wouldn’t happen again.”

Office Audits

Some IRS audits require you or your representative to meet with an agent in-person, at an IRS office. Office audits are usually initiated within one year of when you file your federal tax return and can take roughly 3-6 months to complete. The process goes something like this:

1. Receive a notice from the IRS.
2. Confirm the proposed meeting time or reschedule your meeting.
3. Meet your auditor for an interview.
4. The auditor will review your documents and may request follow-up information.
5. If your tax return is accepted as is, the audit process is over.
6. If your tax return is rejected, you can agree to the proposed changes or petition the Tax Court for a review within 90 days.

Field Audits

You’re most likely to experience a field audit if you own a small business, and these are often the most complex and time-consuming audits. “It can last around 4-6 weeks roughly,” the former Internal Revenue Agent says, although some may take closer to a year.

The steps involved with a field audit are similar to that of an office audit, except that the IRS agent will meet with you or your representative at your business or home. “It starts with mailing out the letters, then meeting and interviewing, then gathering records, presenting findings and the closing process,” the former agent says.

While you won’t need documents for the initial meeting, afterwards you may have to go through an extensive review of your tax return and supporting documents.

What’s the best way to prepare for a field audit? If you receive a field audit notice from the IRS, you should strongly consider hiring a professional representative, such as an enrolled agent, tax attorney or CPA.

“My pro-tip: always hire a professional,” the former IRS agent advises. “It will help the process and going it alone can be worse for the taxpayer.” If you do hire a representative, you may never even have to meet the auditor, he says.

Factors That Can Influence How Long A Tax Audit Takes

According to the IRS, the specifics of your case can play a big role in how long your audit takes. These are some of the main factors that will play a part:

• Type of audit
• Complexity of the issues
• Availability of information requested
• Availability of both parties to meet
• Your agreement/disagreement with the findings

You can also delay the process by requesting an extension, or in other ways. Here are some of the common reasons that an audit may last longer than usual:

Failure To Respond

You have up to 30 days to respond to the initial audit notice and follow-up requests for documents. If you fail to do so, you not only delay the process, but you could end up having to pay additional taxes.

The IRS Makes a Lot of Adjustments

Depending on your case, the IRS auditor may need to make multiple adjustments to your tax return. This process could involve a request for more documents, and the auditor may even need extra time to review your other prior returns.

The IRS Is Pursuing Penalties

If the IRS finds errors on your tax return, or worse, signs of fraud, they may want to investigate further or even pursue penalties. While it’s not very common, an audit involving fraud and potential criminal charges can last years.

Appeals

If you disagree with the auditor’s conclusion, you have the right to appeal. But an appeal will further draw out the process. You’ll have 30 days to submit your request and the appeal process could take 6-12 months.

Small Business Audits

A small business audit can be tedious, since the auditor may need to thoroughly examine a variety of documents to verify that you accurately filed your business taxes.

How long does a tax audit take for a small business owner? Depending on the nature of your business, it could potentially take a few months for the IRS to pore over your receipts, bank statements and accounting records, and even longer if your business deals mostly in cash.

What Is the Statute of Limitations on a Tax Return?

The statute of limitations for the IRS to audit a tax return is generally three years, but most audits involve tax returns that were filed within the two previous years. During your audit, the IRS agent may determine that your additional tax returns, sometimes going as far back as six years, also need to be reviewed.

How To Shorten Your Tax Audit Turnaround Time

There are ways you can speed up the audit process, just be sure you don’t move so quickly that you make a mistake. Here’s what you can do to shrink the timeline:

• Respond promptly to IRS notices.
• Keep pertinent documents for at least three years from when you file the related return.
• Avoid overdue or unfiled tax returns.
• Hire a tax professional or work with a representative from a Low Income Taxpayer Clinic (LITC).
• Maintain active communication with your auditor.

More Information on Taxes

Facing an IRS audit can be frightening, but the process might not be as bad as you expect. If you do get a notice from the IRS, it’s best not to hide. Instead of delaying the process and facing additional taxes or even jail time, be proactive in seeking out resources. For example, you can work with the IRS to set up an installment payment plan to settle your overdue tax debt, and get free advice from an IRS Taxpayer Advocate.

“Based on my experience the IRS has a very fair process, so the taxpayer shouldn’t be scared,” the former IRS agent said. “And we always treated the taxpayer with respect.”