An examination opened five time zones away, by letter

Figures relate to tax year 2025-26 (UK) · 2025 (US)

An envelope arrives in Britain with an American postmark. Inside is a letter asking about one line on a return you filed two years ago.

That is what most examinations look like. Not an interview, not an accusation, just a question with a deadline attached to it.

The difficulty from here is the clock. Every exchange burns two weeks in the post, and the deadline on the letter was set by somebody who assumed you lived down the road.

Key takeaways

• Most examinations are conducted entirely by letter.
• Selection is usually automated rather than personal.
• An IRS audit from abroad runs on American deadlines regardless.
• Your adviser needs authority on file before they can act.
• Day counts and foreign credits are the common expat issues.
• You can ask for more time, and should, early.
• A proposed change is not a final decision.
• Appeal rights exist and are genuinely worth using.

How does an IRS audit start?

With a letter, almost always. According to IRS guidance, an IRS audit reaches you by post rather than by phone, and nobody genuine calls demanding immediate payment. The letter identifies the year, the issue and what it wants from you. It also carries a response date, which from abroad is tighter than it looks once you allow for the post.

Treat anybody ringing you out of the blue about an IRS audit with real doubt.

The genuine process is slow, written and documented at every stage.

Why was your return selected?

Usually by a computer rather than by a person taking an interest in you. A computer scores returns against averages, and anything unusual next to similar filers can draw an IRS audit. Details reported by third parties that does not match your return is the other common trigger, and for Americans abroad that often means a foreign account reported under data sharing deals.

Selection is rarely personal, and it is almost never about something somebody said.

A mismatch between reported data and your return is the likeliest explanation.

What kinds of IRS audit are there?

Three, in ascending order of seriousness. A letters IRS audit runs entirely by letter and covers one or two issues. An office audit asks you to attend with papers, and a field audit means an officer visits your business. From abroad, the first is by far the most common and the others are awkward for everybody.

Distance usually works in your favour here, because travel is as inconvenient for them as for you.

Most expat IRS audits never move beyond letters.

A worked example

Take an illustrative example. An American in Bath claims the foreign earned income exclusion for a year in which she travelled often for work.

A letter asks her to prove the 330 days she claimed outside the United States during the qualifying period.

She has boarding passes and a diary but no single day count, so the rebuild takes three weeks.

The count in the end supports the claim, and the examination closes with no change, but the response date had already passed by the time it was ready.

Three types, one process

What do they ask for?

Documents supporting a specific figure, set out in an details request. For an expat that typically means proof of days outside the country, evidence of foreign tax paid, bank statements, or confirmation of a foreign account balance. The request is narrow. Answering only what they asked usually beats volunteering a wider picture.

Our guide to the CP2000 notice from abroad covers the automated version.

A complete answer to a narrow question closes more examinations than a long explanation does.

Which expat issues come up most?

Day counts for the earnings exclusion, foreign tax credit sumss and unreported foreign accounts, in roughly that order. All three are areas where the figures depend on records held abroad and never reported to the IRS by anybody else. That absence of third party data is precisely why they get examined.

Our guide to the foreign earned income exclusion covers the tests.

The IRS questions what it cannot check for itself.

Can you get more time?

Usually yes, and asking early is far better than missing the date and explaining afterwards. A short written request explaining that you live abroad and need longer usually succeeds without argument. What damages your position is silence followed by a late response.

Ask for the extension in the first week rather than in the last.

Examiners are usually reasonable about distance when you engage with them.

Do you need a adviser?

For anything beyond a simple document request, yes, and they need authority on file before they can speak to anybody. That takes weeks to process, which means filing it on day one rather than once the letters has become difficult. An adviser without authority cannot even confirm that a letter is genuine.

Our guide to Form 2848 and IRS authority covers the form.

Authority first, substance second, is the right order every time.

What if you ignore it?

The examination proceeds without you and the proposed change becomes an assessment. That is the worst outcome available, because it converts a question into a debt and starts the collection machinery. Even a holding response acknowledging the letter is better than nothing at all.

Our guide to IRS payment plans from abroad covers what happens next.

Silence is read as agreement, which is rarely what anybody intends.

What is the 30-day letter?

A letter setting out proposed changes and giving you thirty days to disagree. It is not a bill and it is not final, though it reads alarmingly. Responding within the window preserves your right to take the matter to appeals, which is the cheapest route to a sensible outcome.

From abroad those thirty days disappear quickly, so act on the day it arrives.

Missing it does not end everything, but it closes the easiest door.

What is the 90-day letter?

A formal notice of shortfall, which is a more serious document. It gives you ninety days to take it to the Tax Court, and nothing extends that period. Americans abroad get a longer version of this window, but the deadline remains absolute once it starts.

Our guide to the statute of limitations covers the wider timings.

This is the one deadline where being a day late genuinely ends the argument.

Are appeals worth using?

Very much so, because the appeals function is independent of the examiner and considers the likelihood of success in court. Many cases settle there on terms far better than the examiner proposed. It costs nothing to request and it does not prejudice anything later.

Our guide to an HMRC examination for US filers covers the British equivalent.

In our practice appeals improve the outcome more often than not.

Can they examine your foreign accounts?

They can ask about them, and details exchange means they often already know what exists. An IRS audit that starts on one issue can widen where account reporting looks thin. That is why a tidy foreign account position matters even when the original question was about something else entirely.

Our guide to the FBAR covers the reporting.

Accounts reported by a British bank and absent from your return are an obvious thread to pull.

Will they ask about your British tax?

Often, because a foreign tax credit claim depends on tax actually paid abroad. Expect to produce your Self Assessment sums, evidence of payment and a a reconciliation between the British year and the American one. The two tax years do not align, which is where most of the work lies.

Our guide to Form 1116 and the foreign tax credit covers the claim.

Keeping the British paperwork in a form an American examiner can follow saves considerable time.

Can an IRS audit become criminal?

Very rarely. An IRS audit almost never turns criminal on an ordinary expat return. Criminal referral requires evidence of deliberate deception rather than error or disorganisation. If an examiner stops asking questions and goes quiet, that is the point to take advice rather than to keep corresponding.

Our guide to non-wilful conduct explained covers the distinction.

Ordinary mistakes, even expensive ones, do not reach that threshold.

How long does it take?

Months at best, and an IRS audit running a year is normal from abroad. Each exchange of letters costs a fortnight before anybody has read anything, and examiners handle large caseloads. Patience helps, and so does your own diary of what went out and when.

Log every letter in and out with its date, because the record matters later.

Examiners change during long cases, and the file is what carries continuity.

Does it affect your British position?

Not directly, because HMRC runs its own enquiries on its own criteria. An American change can change your foreign tax credit figures, which sometimes feeds back into the British picture. The two authorities do exchange details, though they do not run joint examinations.

Our guide to overpayment relief for US filers covers British corrections.

A change on one side sometimes needs a corresponding claim on the other.

What records should you keep?

Every letter, your replies, proof of posting, and a running day count where the exclusion matters. Those four cover most of what an IRS audit asks for. Travel records in particular defeat anybody trying to rebuild them years later, which is why you keep them as you go.

Scan everything, because international post does sometimes lose documents.

A clear file beats a clever argument in most IRS audits.

How do you reduce the risk?

File completely, report every account and keep the records that support anything you claim. Most of the IRS audits we see start from a gap between what somebody reported and what somebody else told them. Closing that gap in advance removes the commonest reason for selection.

Our US federal returns service covers the filings themselves.

Completeness protects you far more effectively than caution about what to claim.

How likely is an IRS audit if you live abroad?

Low in absolute terms, but higher than for a comparable return filed at home. Overall audit rates have sat well under 1% in recent years, and most of that activity targets very high incomes or obvious mismatches. Expat returns attract attention because so much of what they claim rests on records nobody else reports to the IRS.

A straightforward return with a credit claim and no foreign accounts is a very unlikely target.

A large exclusion claim with heavy travel is a more interesting one.

What does an IRS audit cost to defend?

A simple letters case answered properly might take a few hours of professional time. A contested examination running through appeals costs considerably more, often several thousand pounds across a year. Set against a proposed change running into five figures, that still represents sensible money to spend.

The expensive cases are the ones where nobody engaged until the thirty day letter arrived.

Early engagement is cheaper in fees as well as in outcome.

Can an IRS audit cover more than one year?

It can, and a finding in one year often prompts a look at the next. Examiners commonly open the year either side where the same issue plainly repeats, so a day count problem in one year rarely stays contained. That is one reason consistency across years matters as much as accuracy within one.

Our guide to amending a US return covers correcting an earlier year.

A missing foreign form can hold several years open at once.

What happens at the end?

One of three things. The audit closes with no change, which is commoner than people expect; it closes with an agreed change you sign; or it closes with a proposed change you dispute and take onwards. A no change letter is worth keeping permanently, because it answers the same question if it ever resurfaces.

Ask for the closing letter in writing rather than assuming silence means it ended.

Files do occasionally sit open long after everybody has stopped corresponding.

Does living abroad slow everything down?

Enormously, and that is the single biggest practical difference. A question that would take a fortnight to settle at home takes two months here, because each letter crosses the Atlantic twice before anybody reads a reply. Examiners rarely allow for that unless you tell them, which is why the first letter you send should explain where you are.

Say plainly in your first reply that you live in Britain and that post takes time.

Most examiners adjust their expectations once they know.

How to handle an IRS audit from abroad

1. Check the letter is genuine and note every date on it.
2. File a power of attorney at once if an adviser will act.
3. Request extra time in the first week, explaining the distance.
4. Answer exactly what was asked, with documents attached.
5. Keep a log of everything sent and getd, with dates.
6. Respond to a 30-day letter within the window to preserve appeals.
7. Treat a 90-day letter as absolute and act the day it arrives.
8. Use appeals rather than accepting an examiner's first position.

Mistakes and penalties we see in an IRS audit

The first is letting the response date pass while assembling perfect records, when a holding letter would have bought time.

The second is filing the power of attorney after the letters has already become difficult.

The third is volunteering far more than they asked for, which widens the audit needlessly.

The fourth is accepting a proposed change without testing it at appeals, where many cases improve.

How US UK Tax Accountants helps

We get authority on file at once, because nothing else can happen until somebody is able to speak to the examiner on your behalf.

Then we answer the question asked, with the British evidence organised in a form an American examiner can actually follow.

If a letter has arrived from the IRS, get in touch before the response date rather than after it.

Last reviewed 25 October 2026. This article is general details and not personal tax advice, and examination procedures change over time.