What Is an Office Audit?

An office audit is an examination of a taxpayer's records by the Internal Revenue Service (IRS) from its offices, and not at the taxpayer's home or office, to ensure compliance with tax laws. Generally more comprehensive than a correspondence audit but less so than a field audit, an office audit is used when agents require some face-to-face investigation.

Key Takeaways

  • An office audit is an examination of a taxpayer's records by the Internal Revenue Service (IRS) from its offices, and not at the taxpayer's home or office, to ensure compliance with tax laws.
  • Office audits often only cover a few specific issues identified by the IRS in a written notice to the taxpayer and also identifies which records the audit will review.
  • The IRS may select a tax return for an office audit at random as part of routine compliance efforts.
  • Other types of audits include correspondence audits, which occur via U.S. mail, and field audits, which take place at a taxpayer or business owner's office or home.
  • IRS Publication 556 provides details on examination and office audit procedures.

Understanding Office Audits

In an office audit, a representative from the Internal Revenue Service (IRS) interviews the taxpayer and inspects the taxpayer's records in-person, usually at an IRS office. The purpose of an office audit is to make sure the taxpayer is accurately reporting income and deductions and paying the lawful amount of tax.

These audits often only cover a few specific issues identified by the IRS in a written notice to the taxpayer. This notice also identifies which records the audit will review.

The IRS may select a tax return for an office audit at random as part of routine compliance efforts. A tax return may also be selected because of suspected errors based on mismatched documents or the examination of related taxpayers' returns. IRS Publication 556 provides details on examination and audit procedures.

Other Types of Audits

The IRS generally conducts the business of an audit in one of three ways: a correspondence audit, an office audit, or a field audit. Of these, a correspondence audit is the most common (and generally considered to be the least serious form of audit). The field audit is the least common and is most often a sign of extensive issues that need to be resolved. An office audit is a middle ground between the two.

If you or your business is audited—regardless of the audit type—contacting an attorney about the matter is advisable. 

Correspondence Audit

Correspondence audits are conducted via mail. These sorts of audits are generally used for less complex problems that involve smaller amounts of money. With correspondence audits, so long as the taxpayer has evidence, the audit is closed.

Field Audit

A field audit is the most comprehensive type of common tax audit. In a field audit, IRS agents come to the taxpayer's office, home, or accountant's office to investigate tax records, consider evidence, and verify that all taxes were paid and documented correctly.