Does your not-for-profit team know what to do if you receive an IRS audit letter? In recent years, the Internal Revenue Service has increased its scrutiny, including actual audits, of not-for-profit organizations.

Audits can cover many areas including verifying that your organization has filed all returns and forms required by law or checking to see if all unrelated business income tax or employment taxes were properly paid. Your Form 990 can play a strong role in the selection process for an IRS audit. For example, the IRS may apply risk models to your organization’s Form 990 data related to governance or the incidence of fraud.

The audit will begin with the initial contact from the IRS and continues until a closing letter is issued, which an IRS agent will discuss with an officer from your team, as well as with your CPA.

If that initial contact letter schedules an agent to visit that means the IRS is conducting a field audit. These field visits fall into one of two categories:

  1. A general program exam, which is typically conducted by a single IRS agent, or
  2. A Team Examination Program audit, which focuses on large, complex organizations and may involve a team of examiners.

That initial contact letter may ask you to deliver documents to the IRS by mail. This is known as a correspondence audit.

Don’t go through the audit alone. Contact our not-for-profit team to help guide you through this process.