Usually shows up as a letter from the Internal Revenue Service saying your tax return has been selected for review, asking for records, explanations, or a response by a deadline. It means the IRS wants to verify part of what was reported on a return and decide whether the numbers, deductions, credits, or income entries are correct. An audit notice is not automatically an accusation of fraud, but it is a real legal and financial problem that can lead to extra tax, penalties, interest, or a broader examination if handled badly.

What to do first: read the notice carefully, confirm the tax year involved, and check the response deadline. Keep the envelope and every page. Match the notice to your return, gather backup like W-2s, 1099s, receipts, bank records, and business logs, and respond on time. Do not ignore it and do not send more than the notice asks for without a plan. Some audits are handled entirely by mail; others become office or field audits. If the IRS says you owe more, you may still have appeal rights.

This can affect an injury claim when a person's income is part of the damages calculation. If you are claiming lost wages or lost business income after an accident, an ongoing audit can complicate proof of earnings. The IRS generally has 3 years to audit under Internal Revenue Code section 6501, with longer periods in some cases, including a 6-year window for certain substantial understatements.