How Long Does an IRS Audit Take to Complete?

An Internal Revenue Service (IRS) audit serves as an examination of an individual’s or organization’s financial records and tax returns. Its primary purpose is to verify the accuracy of reported income, deductions, and credits, ensuring compliance with federal tax laws. The IRS aims to promote voluntary compliance and maintain fairness within the tax system. The duration of an audit varies significantly, influenced by many factors, and there is no fixed timeline for completion.

Opening the Audit

An IRS audit begins with a formal notification sent by mail to the taxpayer’s last known address. This initial correspondence, often an IRS Letter 3000 (Appointment Letter) or similar, informs the taxpayer that their tax return has been selected for examination and outlines the tax year or years under review. The specific type of audit dictates the initial interaction and subsequent procedural steps.

Correspondence audits are the least intrusive, conducted by mail, often focusing on specific items like deductions or credits. Office audits require the taxpayer to appear at a local IRS office with specific documents for review. These audits involve more complex issues than correspondence audits but are less extensive than field audits.

Field audits are the most comprehensive, conducted at the taxpayer’s home, business, or representative’s office. They involve a broader scope of financial records, including in-depth reviews of business operations or complex individual tax situations. Regardless of the audit type, the IRS issues an Information Document Request (IDR), a formal request for specific books, records, and other documentation. Timely and complete responses to IDRs are crucial for the audit’s progression.

Key Influencers of Audit Duration

The complexity of issues significantly impacts audit duration. Simple individual returns with minor deduction questions, such as charitable contributions or medical expenses, conclude more quickly. Complex business returns, international transactions, or intricate deductions like those related to Schedule C or passive activity losses, require extensive review and prolong the process.

The type of audit also directly influences its duration. Correspondence audits, which often focus on a limited number of items and are handled through mail, are the shortest, sometimes concluding within a few months. Office audits take longer due to in-person meetings and broader scope. Field audits, given their comprehensive nature and on-site examination, are generally the longest, potentially spanning over a year or more.

A taxpayer’s responsiveness and the organization of financial records play a substantial role. Providing requested documentation promptly and having well-organized records, such as ledgers, invoices, and bank statements, can significantly expedite the examination. Conversely, delays or disorganized records lead to numerous follow-up requests and extend the audit period. The auditor may issue a Form 886-A, Explanation of Items, to document and explain proposed adjustments, which also requires clear taxpayer understanding and response.

The IRS’s internal workload and resource availability also affect audit progression. High audit activity or staffing shortages may lead to delays in reviewing submitted information or scheduling meetings. These administrative factors, while outside the taxpayer’s control, contribute to the audit’s overall length.

Disagreement between the taxpayer and auditor on findings can further extend the audit. If the taxpayer disputes proposed adjustments, this can lead to additional discussions, further evidence, or internal reviews. Both the IRS and the taxpayer can request extensions of the audit period, often documented on Form 872, Consent to Extend the Time to Assess Tax. Extensions might be sought to gather more information, consult with tax professionals, or allow the IRS more time to complete its review.

Bringing an Audit to a Close

Once the examination phase of an IRS audit is complete, the auditor holds a closing conference or sends a letter outlining findings and proposed adjustments to the tax liability. This discussion allows the taxpayer to understand the auditor’s conclusions and present final arguments or additional documentation. The outcome determines subsequent steps and the timeline for closing the audit.

If the taxpayer agrees with the auditor’s findings and proposed changes, they will be asked to sign Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment. Signing this form indicates agreement and allows the IRS to immediately assess additional tax due or issue a refund, expediting the audit’s formal closure.

Should the taxpayer disagree with proposed adjustments, the IRS will issue a “30-day letter.” This letter details the proposed changes and informs the taxpayer of their right to protest the findings to the IRS Office of Appeals within 30 days. Pursuing an administrative appeal adds a new phase, extending the overall time until a final resolution.

If the taxpayer does not respond to the 30-day letter, or if an agreement is not reached with the IRS Office of Appeals, the IRS will issue a Notice of Deficiency, referred to as a “90-day letter” (Form 531). This document formally states the IRS’s final determination of the tax deficiency and provides the taxpayer 90 days to petition the U.S. Tax Court if they wish to litigate. The issuance of this notice marks a significant administrative step toward closing the audit, even if litigation follows.

The audit is officially closed once one of these scenarios concludes: an agreement is reached and Form 870 is signed, the protest period for the 30-day letter expires without a response, or the 90-day period to petition the U.S. Tax Court expires following the Notice of Deficiency. At this point, the IRS’s examination of the specified tax period is finalized, and any determined tax liabilities are assessed or refunds issued.