Topic 07 · 5 min read
Records, Notices, and Audits
Most letters are a question, not an accusation.
The vast majority of contact from a tax agency is an automated notice about a mismatch — a form you left off, a number that does not line up. Answering promptly with documents usually ends it. Good records are what turn a stressful letter into a ten-minute reply.
What to know
- How long to keep records
- Three years from the filing date covers most situations; six years when income was significantly understated; longer for property and investments.
- Matching notices
- A CP2000-style letter proposes a change because a reported form was not on the return. It is a proposal, not a bill.
- Respond by the date
- Every notice carries a deadline. Missing it turns a proposal into an assessment.
- Audit types
- Most examinations are handled by mail and cover one or two items. In-person audits are rare for simple returns.
- Taxpayer rights
- You have the right to representation, to appeal, and to clear explanations of any proposed change.
The tax benefit
Documented deductions survive review, so the savings you claimed in April stay yours two years later.
Worked example
A letter answered in a week
A taxpayer left a $1,800 1099-INT off a return and receives a proposed change adding $400 of tax. They agree, pay, and the matter closes. Had they ignored it, penalties and interest would have grown for months.
Watch out for
- The IRS does not open contact by phone call, text, or email demanding immediate payment — those are scams.
- Signing an agreement without reading it can waive appeal rights.
- Keep copies of filed returns indefinitely; they are needed for loans and future basis calculations.
Terms from this topic
NoticeAuditStatute of limitationsSubstantiation
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