Correspondence audit
Handled primarily by mail for specified items such as income, credits, expenses or deductions. The danger is assuming the requested documents explain themselves.
Respond by the letter’s deadlineSelected for an IRS audit?
Control what the IRS sees—and what happens next.
An audit begins with questions about a return. It can end with no change, an agreed adjustment or a disputed assessment. Kōkua Tax identifies the issues under examination, rebuilds the support and manages the response so a narrow request does not become a disorganized search through your financial life.
Individuals · Rental owners · Sole proprietors · Partnerships · S corporations · C corporations
An audit is not an accusation of fraud.
The IRS says selection does not always mean there is a problem. But silence, incomplete records and careless explanations can materially worsen the outcome.
Official IRS audit overview →Three examination formats
How the IRS conducts the audit changes the risk and response.
Every audit begins by mail. The letter tells you whether the examination will continue through correspondence or an interview.
Office audit
Conducted at an IRS office and generally focused on identified return issues. Questions and supporting records should be prepared and reconciled in advance.
Representation may attend or appearField audit
A Revenue Agent may examine books and records at the business, home or representative’s office. Business methods, internal controls and related returns may receive closer attention.
Highest need for coordinated representationImportant distinction
A CP2000 is not an audit.
A CP2000 proposes a change when third-party information—such as a W-2 or 1099—does not appear to match the return. It still requires a timely, documented response, but it is part of the Automated Underreporter program rather than a formal examination.
IRS Topic 652: CP2000 underreported income →Why the distinction matters
- The response address and procedure are different.
- You may agree, disagree or partially agree with the proposal.
- The notice may reflect timing, basis or reporting errors—not omitted taxable income.
- Ignoring it can lead to an assessment and later collection action.
Keep the examination controlled
The first requested item may not be the last.
The examiner can pursue related issues or additional years when the information produces new questions. IRS guidance says audits generally include returns filed within the last three years; a substantial error may cause additional years to be added, and the IRS usually does not go back more than six years.
IRS: how far back an audit may go →What the IRS may test
The return is only the starting point.
Bank deposits, Forms W-2 and 1099, cash receipts, payment platforms, ledgers and reported gross receipts.
Business purpose, receipts, invoices, cancelled checks, allocation methods and whether personal costs were excluded.
Purchase records, depreciation, improvements, stock or partnership basis, debt and distributions.
Forms 941 and W-2, contractor reporting, payroll deposits and employee-versus-contractor treatment.
Rental income, personal use, repairs versus improvements, depreciation and passive-activity treatment.
Whether reported income, known assets and spending appear consistent—especially in a cash-intensive business.
Your rights during an audit
You do not have to navigate the examination alone.
Taxpayers have the right to know why information is requested, to receive professional treatment, to retain an authorized representative and to appeal disagreements. An attorney, CPA or Enrolled Agent may be authorized through Form 2848.
Already in an interview?In most cases, if you ask to consult an authorized representative, the IRS must suspend and reschedule the interview.
How an audit ends
Three outcomes—and the signature matters.
No change
The taxpayer substantiates the reviewed items and the IRS proposes no adjustment.
Agreed
The IRS proposes changes and the taxpayer signs the report. The tax, penalties and interest may then move into billing and collection.
Unagreed
The taxpayer disagrees and may request a manager conference, mediation in an eligible case, an IRS appeal or court review—depending on the letter and deadline.
Why Kōkua Tax
Local representation—not a document-forwarding service.
Mainland firms may sell “audit protection” and then assign the response to a remote processor unfamiliar with the return or the way a Hawaiʻi business actually operates. Kōkua Tax works from the books, the filed return and the examiner’s request to build one consistent factual record.
We identify what the IRS is testing before deciding what records and explanations are needed.
Business and rental records are tied to the filed return before they reach the examiner.
Our Hawaiʻi-based Enrolled Agents can communicate with the IRS and represent the taxpayer through examination.
We preserve the documents, legal position and deadlines needed if the examiner does not agree.
How we take control
One audit file. One story. No avoidable surprises.
- 01Read the entire letterConfirm the return, year, examiner, issues and response deadline.
- 02Secure authorizationUse Form 2848 when representation is appropriate and establish the communication channel.
- 03Rebuild the supportReconcile books, source records and tax-return positions before producing documents.
- 04Manage the examinationRespond to requests, track open items and challenge unsupported assumptions.
- 05Evaluate the resultAccept correct adjustments and dispute those the facts and law do not support.
Official IRS sources
Read the rules behind the guidance.
Bring the complete audit letter
Let’s identify what the IRS is examining before you respond.
Give Kōkua Tax 15 minutes to understand the return, requested records and deadline. We will explain the audit level, immediate risk and whether professional representation makes sense.
Schedule my free 15-minute call(808) 565-8244Free · Confidential · Local Enrolled Agents
General educational information only; not legal or tax advice. Audit scope, deadlines, documentation, statutes of limitation and appeal rights depend on the actual letter, return and procedural history.