An audit letter arrives and the clock starts. What slows teams is not the facts. It is scattered documents, unclear explanations, and long responses that miss the point. This pack shows a clean structure you can copy, so you can answer once, answer clearly, and move on.
What this section covers
A practical response structure for US IRS audits that also maps well to UK HMRC enquiries. You get a concise cover letter model, an exhibit indexing system, reconciliation schedules, and a fact timeline template. It suits in-house teams and companies working with offshore accountants. Use it as your IRS Audit Response Pack: Sample Cover Letter, Indexing, and Exhibits (Download).
Before you draft: gather and label
- IRS notice, IDR, or exam letter with requested items
- Tax return and workpapers for the year under exam
- Trial balance, GL extracts, and source documents for each issue
- Signed engagement letters and any prior correspondence
- Authorized representative details and Power of Attorney (if used)
Set a single folder root:/Audit/IRS/<TaxYear>/Response_YYYYMMDD/
Create subfolders: 01_Cover_Letter, 02_Exhibits, 03_Recons, 04_Timeline, 05_Support.
Cover letter: structure and sample
Purpose
Frame the response, map each request to exhibits, and state the outcome you seek. Keep to one or two pages.
Components
- Letterhead with EIN, tax year, notice number, and contact details
- Salutation and reference line
- One-paragraph context and scope of response
- Issue-by-issue answers with exhibit callouts
- Summary and requested disposition
- Signature block and contact info
Sample (copy and edit)
[Date]
Internal Revenue Service
[Address from notice]
Re: [Taxpayer Legal Name], EIN [XX-XXXXXXX] — Tax Year [YYYY]
Response to [Notice/IDR reference and date]
Dear Examiner,
We submit our response to the Service’s information request dated [date] for the items listed below. Each item is addressed briefly here and supported by indexed exhibits.
Issue A: [Short title]
- Response: [One to three sentences with the conclusion]
- Support: Exhibits A1–A3; Reconciliation R-A; Timeline T1
Issue B: [Short title]
- Response: [One to three sentences with the conclusion]
- Support: Exhibits B1–B2; Reconciliation R-B
We believe the enclosed materials resolve the requests as filed. Please contact [Name, Title, phone, email] for any clarifications.
Sincerely,
[Name]
[Title], on behalf of [Taxpayer Legal Name]
[Address | Phone | Email]
For UK enquiries, replace IRS references with HMRC, add UTR and VAT number as relevant.
Exhibit indexing that examiners can follow
Rules
- Use short, legible names.
- One fact per exhibit where possible.
- Cross-reference in the letter and in the file name.
- Add page numbers to multi-page PDFs.
Format
Prefix by issue → Letter (A, B, C)
Sequence → 1, 2, 3
Example filenames:
A1_Invoice_AlphaCo_2024-03-17.pdf
A2_BankStatement_Chase_Apr2024_p1-4.pdf
B1_Contract_SaaS_2023-12-01.pdf
Exhibit index sample
| Ref | Description | Period | Source |
|-----|------------------------------------------|-------------|-----------------|
| A1 | Customer invoice #INV-311 (Alpha Co.) | Mar 2024 | AR Subledger |
| A2 | Bank statement (Chase) p.1–4 | Apr 2024 | Bank Portal |
| A3 | Cash receipt screenshot (ID #8472) | Apr 2024 | ERP |
| R-A | Revenue tie-out: GL→Return (Sch. M-1) | FY 2024 | Close workbook |
| T1 | Factual timeline for Issue A | 2023–2024 | Prepared by Co. |
Save the index as 02_Exhibits/Exhibit_Index.xlsx and export a PDF copy in the same folder.
Reconciliations that close the loop
Use targeted schedules to connect source data to the filed return. Avoid long narratives.
Revenue tie-out (example layout)
| Line | Source (GL) | Amount | Adjustments | Return Line | Amount |
|------|-------------|--------|-------------|-------------|--------|
| 1 | GL 4000 | 1,245,220 | - Deferred Rev Δ (35,410) | Form 1120 Line 1a | 1,209,810 |
| 2 | GL 4010 | 58,600 | - Contra Rev (1,200) | Form 1120 Line 1a | 57,400 |
| | | | | Total per return | 1,267,210 |
Expense sampling tie-out
| Sample ID | Vendor | Date | Amount | GL Acct | Exhibit Ref | Notes |
|-----------|--------|------|--------|---------|-------------|-------|
| S-01 | Beta Ltd | 02/14 | 4,820 | 6100 | A1 | Contract on file |
Keep each recon to one tab, with a clear sign-off block.
Timeline of facts
Summarize what happened, when, and who approved it. This helps resolve “why” without long emails.
Template
| Date | Event / Document | Parties | Impact on Tax Position | Exhibit |
|------------|---------------------------|-----------------|------------------------|---------|
| 2024-01-05 | MSA executed | Taxpayer, Alpha | Revenue recognition start | B1 |
| 2024-03-17 | First invoice issued | Taxpayer | Performance obligation met | A1 |
| 2024-04-10 | Cash received | Bank | Cash application | A2, A3 |
Packaging and submission
- Combine the cover letter and exhibit index into a single front packet PDF.
- Place each issue in its own subfolder with matching filenames.
- Use searchable PDFs. Avoid images of text when possible.
- Keep proof of mailing or portal upload receipts.
- Track deadlines and call logs in a response tracker.
For HMRC, follow the enquiry letter’s channel. Use the same indexing logic and keep a file note for any phone calls.
Maker–checker with offshore teams
- Assign owners for each issue.
- Require a preparer sign-off and a reviewer sign-off on every recon and timeline.
- Use a checklist to confirm every exhibit is referenced at least once.
- Restrict edit rights on the final PDF packet. Keep source files versioned.
Quality checks before you send
- Does every issue in the notice map to a response paragraph
- Does every claim have at least one exhibit
- Do totals in recons match the return and GL
- Are dates consistent across invoices, bank, and ledger
- Is contact information correct and visible on page one
Copy-paste templates
1) Cover letter shell
[Company Letterhead]
[Date]
IRS — [Unit/Address from notice]
Re: [Taxpayer], EIN [XX-XXXXXXX], Tax Year [YYYY]
Response to [Notice/IDR #] dated [Date]
[Opening paragraph: scope and summary]
Issue A — [Title]
Response: [2–3 sentences]
Support: Exhibits A1–A?, Reconciliation R-A, Timeline T1
Issue B — [Title]
Response: [2–3 sentences]
Support: Exhibits B1–B?, Reconciliation R-B
Requested disposition: [Close as filed / adjust as described]
Sincerely,
[Name, Title]
[Phone, Email]
2) Exhibit index (CSV starter)
Ref,Description,Period,Source,File
A1,Customer invoice #INV-311,Mar 2024,AR Subledger,A1_Invoice_AlphaCo_2024-03-17.pdf
A2,Bank statement p1-4,Apr 2024,Bank Portal,A2_Bank_Chase_Apr2024_p1-4.pdf
R-A,Revenue tie-out FY2024,FY2024,Close Workbook,RA_Revenue_TieOut_FY2024.xlsx
3) Reconciliation sign-off block
Prepared by: [Name, Date] Reviewed by: [Name, Date] Tickmarks: [Legend]
4) Timeline header
Matter: [Issue name] Period: [YYYY] Contact: [Name, Email]
Summary
Keep the response short at the front and heavy in the back. A clear cover letter, a tight index, reconciliations that tie to the return, and a dated timeline will answer most audit questions without back-and-forth. This structure helps US IRS and UK HMRC workflows and scales well with offshore support.
