What is IRS Letter 566?

IRS Letter 566 is the initial contact letter that opens an IRS audit (examination). It informs you that the IRS has selected your tax return for examination and lists the specific items being examined, the documents and records you need to provide, and the audit type — correspondence audit (by mail), office audit (at an IRS office), or field audit (at your home, business, or representative's office). Letter 566 establishes your rights during the examination and includes contact information for the examining agent. It is NOT a bill or a determination — it is the opening notice that gives you the opportunity to provide documentation supporting the items on your return.

What should I do when I receive Letter 566?

Do not ignore Letter 566. The audit will proceed with or without you — and if you do not respond, the IRS will issue a Notice of Deficiency (Letter 3219/531) based solely on its findings, typically treating unsupported items as additional income. Steps: (1) Read the letter carefully to identify which tax year and which items are under examination. (2) Gather all records supporting the items listed — receipts, canceled checks, bank statements, contracts, logs, and third-party documentation. (3) Contact a tax professional before communicating with the examiner. (4) Respond by the deadline on the letter — typically 30 days. (5) Never volunteer information beyond what the examiner asked for.

Stack of tax documents with magnifying glass symbolizing IRS audit examination

Audit Examination Notice

IRS Letter 566: Audit Examination Begins

Letter 566 opens an IRS audit of your tax return. The IRS has selected specific items for examination and is requesting documents. This is not a bill or a final determination — but how you respond now determines the outcome. Never face an IRS examiner alone.

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A specialist will review your case and outline your options — completely free.

What Is Letter 566?

IRS Letter 566 is the formal opening of an IRS audit. When the IRS selects your tax return for examination — whether randomly (through the Discriminant Function System), because of related examination activity (a business partner or investor was audited), or because your return contains items that fall outside statistical norms — the first notice you receive is Letter 566. It tells you which tax year is under examination, which specific items the IRS is questioning, and what documents you need to provide.

You have the right to professional representation. Hire a tax professional before responding to Letter 566. An experienced representative knows what documents to provide — and more importantly, what not to volunteer. Taxpayers who represent themselves in audits statistically fare worse than those with professional representation. Your representative can handle all communication with the examiner, attend meetings on your behalf, and protect you from inadvertently expanding the scope of the audit.

Three Types of IRS Audits

Most Common

Correspondence Audit

Handled entirely by mail. The IRS asks you to mail specific documents supporting items on your return. Most common type — typically involves verification of deductions, credits, or income items. Less invasive but still requires careful, complete responses.

Moderate

Office Audit

Conducted at an IRS office. You or your representative meet with an examiner at a local IRS office. Typically involves more complex issues than correspondence audits — business income, rental properties, or multiple deduction categories.

Most Intensive

Field Audit

Conducted at your home, business, or representative's office. Most comprehensive type — the IRS examiner comes to you. Typically reserved for complex business returns, high-income individuals, or cases with significant potential adjustments.

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