When a client's return gets pulled for examination, the first call usually comes to the preparer. What happens next depends on two things: your credential and the type of audit. This guide covers the practitioner side of a client IRS audit from notice through resolution -- representation rights by credential, the three audit formats, how to use Form 2848, document strategy, the CP2000 response process, your own exposure when the IRS finds errors, and the post-audit steps that keep your practice and your client's record clean.
This guide is written for tax preparers managing a client's audit situation -- not for taxpayers seeking recourse against their preparer. The information reflects IRS rules as of 2026 under Circular 230 and IRS Publication 947. Because IRS procedures and regulatory rules are subject to change, verify current requirements at IRS.gov before relying on any specific procedural detail. This guide is informational and does not constitute legal or professional advice.
Representation Rights: What Your Credential Allows
Before you take a single action on behalf of an audit client, confirm what you are actually authorized to do. Circular 230 and IRS Publication 947 draw a firm line between unlimited practitioners and everyone else. Getting this wrong is not a technicality -- representing a client without authority exposes both you and the client to unnecessary risk.
EAs, CPAs, and attorneys: unlimited practice rights
Enrolled agents, certified public accountants, and attorneys hold unlimited representation rights before all IRS divisions: Examination, Appeals, and Collections. They can represent any client, on any return, in any matter before the IRS, and they can sign Form 2848 without restriction on the type of matter covered. If a client's audit escalates from Examination to Appeals, or if Collections becomes involved after an assessment, an EA, CPA, or attorney can stay with the matter all the way through. For the appeals step after an exam, including the written protest requirements, small case requests, and conference strategy, see the IRS examination appeals guide for tax practitioners. See the EA exam guide for the credential path and the Circular 230 guide for the full competence and conduct framework.
Non-credentialed preparers with a PTIN: limited to Examination only
Non-credentialed preparers who hold a valid PTIN may represent clients before the IRS Examination Division, but only under strict conditions defined in Circular 230 Section 10.7(c). Both conditions must be met simultaneously:
- You personally prepared and signed the return that is under examination.
- The examination is before the Examination Division -- not Appeals and not Collections.
If either condition is absent, your right to represent under Section 10.7(c) does not apply. Non-credentialed preparers cannot represent clients in Appeals or before the Collection function under any circumstances. If a matter moves out of Examination, refer the client to an EA, CPA, or tax attorney.
AFSP holders: limited representation, pending regulatory change
Preparers who hold a current AFSP Record of Completion and have signed the Circular 230 consent have limited representation rights before the Examination Division for returns they personally prepared and signed. This is the same functional scope as Section 10.7(c) for PTIN holders -- Examination only, on returns the AFSP participant signed.
Important note: in December 2024, the Treasury Department and IRS issued a proposed rulemaking that would amend Circular 230 in ways that could affect AFSP holder representation rights. As of June 2026, that proposed rulemaking has not been finalized. Monitor the IRS website and the Federal Register for updates before relying on AFSP-based representation authority. Until the rule is finalized, treat current AFSP rights as potentially subject to change.
Types of IRS Audits and the Preparer's Role in Each
The three IRS audit formats differ in scope, formality, and what the preparer is expected to do. Know which type you are dealing with before you decide how to proceed.
Correspondence audit (CP2000 and AUR notices)
Correspondence audits are the most common type. The IRS issues a CP2000 (Automated Underreporter) or similar AUR notice when information on the return does not match third-party data -- a W-2, 1099-B, 1099-K, or other document filed with the IRS. The notice proposes a specific tax change and asks the taxpayer to agree, dispute, or partially concede the item.
Credentialed preparers can respond on the client's behalf using Form 2848 (see Section 4 below). Non-credentialed preparers with PTIN -- if they prepared and signed the return -- can also respond for the Examination phase under Circular 230 Section 10.7(c). For the CP2000 specifically, see Section 7 of this guide for the full response process.
Office audit
An office audit requires the taxpayer (or their representative) to appear at an IRS office with documentation. The IRS identifies specific items to review and provides a list of records to bring. A credentialed preparer holding a valid Form 2848 for the relevant tax year can accompany the client or appear on their behalf. Non-credentialed preparers can help the client gather and organize records in advance, but they cannot appear as the client's representative in the audit meeting itself unless they qualify under Section 10.7(c) for that specific return and the matter is before Examination only.
Field audit
A field audit is the most extensive format. An IRS revenue agent comes to the taxpayer's home, business, or the preparer's office. Field audits typically involve business returns, complex individual returns with self-employment income, or returns where the IRS needs to review books and records directly. Full representation authority is required. If you are a non-credentialed preparer and a client receives a field audit notice, refer them to an enrolled agent, CPA, or tax attorney. You may remain in a supporting role -- organizing workpapers, providing copies of the return file -- but the authorized representative leads. Do not attempt to speak for the client at a field audit without proper authorization in place.
Form 2848 for Audit Representation
Form 2848 (Power of Attorney and Declaration of Representative) is the form that authorizes you to act on your client's behalf before the IRS. For detailed mechanics on Form 2848 vs. Form 8821 and when to use each, see the Form 2848 and Form 8821 guide. For audit representation specifically, here is what you need to know.
Completing and filing Form 2848
Specify the tax type (e.g., Form 1040, income tax), the tax year(s) at issue, and the specific matters covered. Scope the authorization to match the actual matter: the tax year under examination and the specific tax type. Overly broad authorizations can create confusion; too-narrow ones can require amendments mid-case. The taxpayer signs Part I; you sign the Declaration of Representative in Part II, indicating your credential category. Refer to the current IRS instructions at IRS.gov/Form2848 before filing.
Submission: CAF unit vs. online Tax Pro Account
You can submit Form 2848 by mail or fax to the IRS Centralized Authorization File (CAF) unit, or online through the IRS Tax Pro Account portal for eligible filings. CAF unit submissions typically take several weeks to process; online submissions through Tax Pro Account post faster where available. Your CAF number ties the authorization to your practitioner record and is what IRS personnel look up when you call or write on the client's behalf. If you do not yet have a CAF number, the IRS will assign one when your first Form 2848 is processed. Verify current submission methods and processing times at IRS.gov, as these can change.
Scope and duration
The authorization is limited to the tax matters and years specified on the form. It remains in effect until it is revoked by the taxpayer or by you, or until the matter is resolved. If the audit expands to additional tax years or a different tax type, you will need an updated Form 2848 to cover that expanded scope. You can file both Form 2848 and Form 8821 for the same client simultaneously -- Form 2848 for representation authority and Form 8821 to ensure transcripts and IRS notices continue to route to your office.
Your Own Risk in a Client Audit
A client audit is not just a client problem. When the IRS examines a return you prepared and signed, it is also a review of your work. If the audit reveals that you understated a position the IRS regards as requiring a higher standard of care, you face personal exposure under the preparer penalty provisions.
IRC Section 6694 penalties against the preparer
Under IRC Section 6694, penalties can be assessed directly against the return preparer -- not the client. Two tiers apply (verify current penalty amounts at IRS.gov, as they are subject to change):
- Section 6694(a) -- unreasonable position: a penalty equal to the greater of $1,000 or 50% of the income derived (or to be derived) by the preparer from preparing the return, if the understatement arose from an unreasonable position the preparer knew or should have known about.
- Section 6694(b) -- willful or reckless conduct: a penalty equal to the greater of $5,000 or 75% of the income derived from the return, if the understatement arose from willful or reckless disregard of rules or regulations.
These penalties are per-return and are assessed against the preparer individually, regardless of whether the client ultimately pays the underlying tax. See the tax preparer penalties guide for the full penalty framework, including due diligence penalties under Section 6695.
OPR referral and PTIN program action
If the IRS determines that a preparer engaged in conduct that warrants professional discipline, the matter may be referred to the IRS Office of Professional Responsibility (OPR) for Circular 230 sanctions (applicable to EAs and other Circular 230 practitioners) or to the IRS PTIN program for action against the preparer's PTIN registration. Outcomes range from a censure or suspension to disbarment from practice before the IRS. Maintaining adequate documentation for every return position you take is the practical protection against this exposure. See the Circular 230 guide for the conduct standards that govern credentialed practitioners.
Document Gathering: What to Produce and What to Hold Back
Every audit response starts with documentation. The core principle is simple: provide what is responsive to the specific request, and nothing more. The IRS asks about a line item; you answer that line item.
Reconstruct the supporting record
Begin by reviewing the return file you have on hand. For the items under examination, compile the documentation that substantiates the position: source documents the client provided, workpapers, and any third-party statements. If the client cannot locate original records, explore reconstruction options: bank statements, credit card records, mileage logs, calendar entries, contemporaneous emails, or photographs of business assets. Reconstructed records can support a position but are generally weaker than contemporaneous originals. Document your reconstruction method in writing.
Produce only what is requested
Do not submit documents that go beyond the scope of the notice or information document request (IDR). Over-production creates two problems: it can surface unrelated issues the IRS is not currently looking at, and it extends the time the examiner spends on the matter. If the notice questions a specific schedule or income figure, your response package covers that item. If you have questions about whether a document is relevant to the specific IDR, consult the applicable IRS instructions or, for complex matters, retain a tax attorney.
Responding to a CP2000 Underreporter Notice
The CP2000 is the most common audit-type notice. The IRS receives third-party information (W-2s, 1099s, 1098s) and compares it to the return filed. When it finds a discrepancy, it proposes a change to the tax owed and gives the taxpayer an opportunity to respond. It is not a bill and it is not a final assessment -- it is a proposal.
The 60-day response window
The CP2000 states a response deadline on the face of the notice. The standard deadline is 60 days from the date of the notice. Always verify the specific deadline shown on the notice received, as the IRS may extend in some cases or the notice date may differ from the client's receipt date. Missing the deadline without an extension can result in the IRS issuing a statutory notice of deficiency, which carries different procedural rights and time limits.
Concede, dispute, or partially concede
Review the notice against the return to determine whether the IRS's proposed change is correct, incorrect, or partially correct. Three response options apply:
- Full agreement: the IRS's proposed change is correct. Sign and return the agreement form with payment (or an installment arrangement). No additional documentation is necessary unless the notice instructs otherwise.
- Full disagreement: you dispute the entire proposed change. Prepare a written explanation with supporting documentation. Send the response to the address on the notice within the deadline.
- Partial agreement: some items are correct; others are not. You can agree to the items you concede and dispute the rest in the same response. Be specific about which line items you agree to and which you are contesting, and attach documentation for the disputed items only.
Requesting an extension of time to respond
If you need more time to gather documentation, call the phone number on the CP2000 before the deadline and request an extension in writing. The IRS generally grants one extension. Do this proactively -- do not let the deadline pass without a response or without a granted extension in hand. Verify current IRS extension procedures at IRS.gov, as the process may change.
When to Refer Immediately
Not every audit stays in the routine category. Several situations require you to step back and refer -- and to protect yourself in the process.
Fraud allegations or criminal referral risk
If the IRS revenue agent or examiner asks questions that suggest a civil fraud assertion (Intent to evade, fraudulent return, civil fraud penalty under IRC Section 6663), or if there is any indication that the matter may be referred to IRS Criminal Investigation, refer the client to a tax attorney immediately. Tax attorneys carry attorney-client privilege that other practitioners do not. A CPA or EA does not have the same evidentiary privilege in criminal matters. Do not continue to represent in this situation without a tax attorney in place.
Penalties potentially attributable to your conduct
If the audit has surfaced positions that could result in preparer penalties under Section 6694, or if the IRS has indicated it may look at your conduct as the preparer, two things happen at once. First, refer or co-refer the client to an EA, CPA, or attorney who can represent the client independently of your interests -- because your interests and the client's interests may diverge if preparer penalties are on the table. Second, notify your errors and omissions insurance carrier right away. See the E&O insurance guide for what your policy covers and what the notice requirements are. Delaying that notification can jeopardize coverage.
Audits beyond your representation authority
As covered in Section 1, non-credentialed preparers cannot represent in Appeals or Collections. If an Examination audit moves to either of those venues, refer promptly. Continuing to act without authority at that stage is a Circular 230 violation for credentialed practitioners and exposes non-credentialed preparers to IRS sanctions. The client deserves a representative who can follow their matter all the way through.
When an audit leaves a client with a balance they cannot pay, an Offer in Compromise may be an alternative to a payment plan; see the IRS Offer in Compromise guide for the grounds and when full representation rights are required.
Client Communication Throughout the Audit
Most audit problems that become practice management problems start with unclear client communication. Set expectations at each stage, not just at the beginning.
Before the audit: set scope and timeline expectations
When you receive the audit notice and confirm you will handle the matter, explain to the client in plain terms what type of audit it is, what the IRS is questioning, and what the timeline typically looks like. A correspondence audit (CP2000) that results in a clean resolution typically takes four to six months from notice date to closure -- and can take longer if the IRS is backlogged or if the response leads to additional questions. An office or field audit can run longer. Do not promise a specific outcome; explain the process and what "success" looks like at each step. Confirm in writing what the engagement covers and your fee for representing them.
During the audit: keep the client informed and keep them out of the way
Clients who contact the IRS directly during an active representation engagement create complications. Instruct the client clearly: all IRS contact goes through you while the Form 2848 is on file. If the IRS calls the client directly, the client should confirm they are represented, provide your name and CAF number, and refer the IRS employee to you. Do not let the client improvise a position on the phone with an examiner. Keep the client updated at meaningful milestones: when you submit a response, when the IRS acknowledges receipt, and when you receive any IRS communication. Do not go silent for weeks without a status note; that silence generates follow-up calls that consume your time unnecessarily.
After the audit: explain what happened and what comes next
When the examination closes, give the client a clear written summary of the outcome: agreed changes (if any), the resulting tax liability or refund, any penalties assessed and whether you will pursue abatement, and any next steps (payment arrangement, amended return, Appeals if applicable). Clients who understand the outcome are more likely to follow through on any required actions and less likely to resurface with complaints months later about unexpected balances.
Post-Audit Checklist
Once the examination closes -- whether by agreement, default assessment, or a no-change letter -- run through these steps before you close the client file.
- Amend the return if the agreed changes require it. If the audit resulted in agreed changes that need to be reflected in a corrected return, prepare and file the amended return promptly. Confirm with the client that any additional tax owed has been paid or that a payment arrangement is in place before you close the file.
- Review whether a penalty abatement is warranted. If the exam resulted in penalties (late filing, accuracy-related, or other), assess whether the client qualifies for first-time abatement or reasonable cause relief. A penalty abatement request can follow the examination closure.
- Update your WISP if data handling issues emerged. If the audit revealed gaps in how you collected, stored, or handled client records -- documents that should have been retained but were not, or a document request you could not fulfill because of poor record organization -- update your Written Information Security Plan accordingly. See the IRS WISP template guidance for required elements. Under your IRC Section 6107 obligations, retain all audit correspondence, notices, responses, workpapers, and authorization forms in the client file.
- Retain all audit correspondence per IRC Section 6107. Keep copies of every IRS notice, every response you submitted, the signed Form 2848, all workpapers prepared in connection with the audit, and the final closure document (closing agreement, no-change letter, or notice of deficiency if applicable). The retention period for these records follows your general return retention obligations; see the tax return retention guide for the applicable periods.
- Revoke Form 2848 if the representation is complete. Once the matter is closed and you no longer represent the client in that matter, consider filing a revocation of the Form 2848 to remove your authorization from the CAF for that scope. This is an administrative cleanup step, but it prevents stale authorizations from creating confusion if the client's account is later reviewed.
- Close E&O notification if opened. If you notified your E&O carrier during the audit, confirm the closure of the matter with your insurer per their notification requirements and retain the claim or incident documentation in your own files.
Frequently Asked Questions
Can a non-credentialed tax preparer represent a client in an IRS audit?
A non-credentialed preparer with a PTIN may represent clients before the IRS Examination Division only, and only on returns they personally prepared and signed, under Circular 230 Section 10.7(c). They cannot represent in Appeals or Collections. EAs, CPAs, and attorneys have unlimited representation rights before all IRS divisions. Note: the December 2024 proposed Circular 230 rulemaking may affect AFSP holder representation rights; that rulemaking was still pending as of June 2026 and is not yet final. Verify current rules at IRS.gov.
What is the standard response window for a CP2000 notice?
The CP2000 typically states a 60-day response deadline on the face of the notice. Always verify the specific deadline shown on the notice received, as the IRS may extend in some cases. Extensions of time to respond can be requested in writing before the deadline expires. Verify current IRS CP2000 procedures at IRS.gov.
What is a preparer's personal risk if the IRS finds errors in a client's audit?
If the IRS determines that a preparer understated tax on a return, the preparer may face penalties under IRC Section 6694: the greater of $1,000 or 50% of income derived from the return for an unreasonable position (Section 6694(a)), and the greater of $5,000 or 75% of income derived for willful or reckless conduct (Section 6694(b)), per return. The IRS may also refer the matter to the Office of Professional Responsibility (OPR) or the PTIN program. In serious cases, the preparer should consult their own attorney and notify their E&O insurance carrier.
What documents does the IRS typically request in a correspondence audit?
A correspondence audit targets a specific line item or income figure that does not match third-party reporting. Provide documentation relevant to that specific item only: receipts, bank statements, brokerage statements, or other records that substantiate the position on the return. Do not submit documentation beyond what the notice requests. Over-production can surface unrelated issues and extends the matter unnecessarily.
Can I still help my client if I am not credentialed and the audit goes to Appeals?
Not as their representative. Non-credentialed preparers cannot represent clients before IRS Appeals under any circumstances. If the matter moves to Appeals, refer the client to an enrolled agent, CPA, or tax attorney immediately. You may continue in a support role -- providing copies of the return file, clarifying what positions were taken and why, and helping the EA or attorney understand the return -- but the credentialed representative handles all IRS contact from that point forward.
Related Practitioner Guides
The following guides cover the examination types and downstream procedures that practitioners should consider alongside the general IRS audit representation framework.
- IRS Correspondence Examination Guide -- correspondence examinations are the most common type of IRS audit; the general IRS audit guide and the correspondence examination guide are used together to triage and respond to an initial IRS contact.
- IRS Field Office Examination Guide -- field audits escalate when the correspondence stage fails or when complexity requires an agent visit; the general audit guide sets the strategic framework that the field examination guide applies in a more intensive examination context.
- IRS Examination Appeals Guide -- the appeals process is the primary alternative to Tax Court when an examination concludes with a proposed adjustment; understanding appeals options is an essential part of the overall IRS audit strategy covered in the general audit guide.
- Tax Court Petition Guide -- if examination and appeals do not resolve the dispute, the practitioner must decide whether to petition the Tax Court, pay and sue for refund in district court, or accept the assessment; the Tax Court petition guide is the direct next step after a failed IRS examination.