The IRS is not allowed to conduct repetitive IRS examinations against a taxpayer unless substantial audit adjustments are found. The IRS is allowed to audit the taxpayer for the same issue or issues in either of the two preceding tax years but if no substantial change in amount of the liability resulted, the auditor can close the case without adjustment.
This basically means, the IRS is allowed to conduct repetitive examinations only in situations where an audit involving either of the prior two tax years resulted in a substantive tax change.
Repetitive IRS Examinations Documents
It is important to keep copies of all prior years’ contact letters, no change letters, and audit reports as evidence of the results of a prior year’s audit. These copies are what will be your line of defense if the IRS tries to conduct a repetitive audit without having made substantive tax changes in the prior two years.
It is also important to remember that the auditor will have difficulty obtaining these documents internally and this will slow the process down if the taxpayer is unable to provide them to the auditor.