IRS Letter 692 Explained
Understanding an IRS Examination Conference Letter
IRS Letter 692 is an examination letter used in certain audit situations to communicate with taxpayers regarding the status of an IRS examination and to arrange or discuss examination findings. Depending on the type of audit and the IRS office handling the case, the letter may request a conference, explain the next stage of the examination, or identify issues that remain under review.
Receiving Letter 692 generally means your examination has progressed beyond the initial document gathering stage. At this point, the examiner has reviewed much of the available information and may be preparing to discuss the examination results, request clarification, or explain proposed adjustments.
Although the examination may be nearing completion, Letter 692 does not necessarily mean the IRS has made a final determination. Taxpayers often still have an opportunity to explain facts, provide additional documentation, or resolve issues before the examination proceeds to the next stage.
Key Takeaways
- Letter 692 is associated with certain IRS examination conferences.
- The IRS may use the letter to discuss examination findings or remaining issues.
- The examination is often well underway when Letter 692 is issued.
- Additional documentation or clarification may still be requested.
- The examination may continue toward agreement, Appeals, or other administrative procedures depending on the issues involved.
What Is IRS Letter 692?
Letter 692 is an examination communication used in certain IRS audit situations after the examiner has completed a substantial portion of the review. Rather than initiating the audit, the letter generally relates to discussions about the examination, unresolved issues, or proposed findings.
Depending on the facts of the case, the examiner may use the conference to review supporting documentation, explain proposed adjustments, answer questions, or determine whether additional information should be considered before finalizing the examination.
The exact contents of Letter 692 may vary depending upon the type of examination, the taxpayer involved, and the IRS operating division conducting the audit.
Why Did You Receive Letter 692?
Letter 692 generally indicates that your examination has progressed to the point where the IRS is preparing to discuss the status of the audit, explain examination findings, or address remaining questions before moving to the next procedural stage.
Discuss Examination Findings
The examiner may explain proposed adjustments and the reasoning supporting those conclusions.
Clarify Outstanding Issues
The IRS may request additional explanations or documentation before completing the examination.
Resolve Remaining Questions
Some issues can be resolved through discussion without requiring additional administrative proceedings.
A Conference Is Not Necessarily the End of the Audit
Even if the examiner discusses proposed adjustments during a conference, the examination process may not yet be complete. Depending on the issues involved, taxpayers may still provide additional information, reach agreement with the examiner, or continue through the IRS administrative review process.
Review the letter carefully, understand its purpose, and prepare for the conference by organizing your records and reviewing the issues identified during the examination.
How to Prepare for an IRS Examination Conference
If Letter 692 schedules or references an examination conference, preparation is important. The conference provides an opportunity to better understand the examiner's position, discuss unresolved issues, and determine whether additional documentation or clarification may affect the outcome of the examination.
Before participating in the conference, review the examination issues carefully, organize your supporting documentation, and understand which adjustments—if any—the IRS is proposing. Being prepared often leads to a more productive discussion.
Six Steps Before the Conference
Review the Examination File
Read prior IRS correspondence, Information Document Requests, your responses, and any examination reports received during the audit.
Understand the Proposed Issues
Identify the adjustments or unresolved issues the examiner intends to discuss. Understanding the IRS's position before the conference allows you to prepare a more focused response.
Organize Supporting Documentation
Gather records supporting your position, including receipts, accounting reports, contracts, bank records, depreciation schedules, and any additional documentation that addresses the issues under examination.
Prepare Questions
Use the conference to better understand the examiner's reasoning. If an adjustment is proposed, ask which facts or documentation the IRS believes are insufficient or inconsistent.
Know Your Rights
Taxpayers generally have the right to professional representation, courteous treatment, and administrative review of disputed examination findings when available under IRS procedures.
Take Notes During the Conference
Document the issues discussed, any agreements reached, additional documents requested, and deadlines established during the conference.
Topics Commonly Discussed During an Examination Conference
Proposed Adjustments
The examiner may explain adjustments affecting income, deductions, credits, depreciation, or other items reported on the return.
Supporting Documentation
Additional records may be requested if the examiner believes more evidence is needed before completing the examination.
Penalty Considerations
The examiner may discuss whether penalties are being considered and explain the basis for those determinations.
Next Procedural Steps
The conference often concludes with a discussion of what happens next, including additional document requests, agreement procedures, or available administrative review.
Possible Outcomes Following the Conference
Depending on the facts developed during the examination conference, the IRS may conclude the audit without changes, request additional documentation, revise proposed adjustments, or issue formal examination findings explaining the examiner's conclusions.
If disagreements remain after the conference, additional administrative procedures—including Appeals in appropriate cases—may become available before the matter proceeds further.
Common Mistakes During an Examination Conference
- Attending the conference without reviewing prior IRS correspondence.
- Failing to organize supporting documentation before the meeting.
- Guessing when answering factual questions instead of verifying information.
- Overlooking opportunities to clarify misunderstandings or provide additional documentation.
- Leaving the conference without understanding the next procedural steps or applicable deadlines.
- Failing to keep detailed notes regarding the issues discussed and any agreements reached.
Where Letter 692 Fits in the IRS Audit Process
By the time you receive Letter 692, the IRS examiner has generally completed much of the factual development of the examination. The conference provides an opportunity to discuss the examiner's conclusions before the IRS proceeds to the next stage of the audit.
Letter 2205 or Letter 566
Form 4564
Letter 692
Form 4549 / Letter 525
If Necessary
Frequently Asked Questions
Does Letter 692 mean the audit is over?
Not necessarily. Depending on the examination, the conference may occur before the IRS issues its formal examination report or requests additional documentation.
Should I bring additional records to the conference?
If you have documentation that directly addresses issues under examination and has not previously been provided to the IRS, it may be appropriate to discuss those records during the conference.
Can I disagree with the examiner?
Yes. If you disagree with the examiner's conclusions, the conference provides an opportunity to explain your position, present supporting information, and discuss the issues before the examination proceeds further.
Can someone attend the conference on my behalf?
Generally, yes. Taxpayers may authorize a CPA, attorney, or enrolled agent to represent them before the IRS by executing the appropriate authorization.
Will I receive another report after the conference?
Depending on the circumstances, the IRS may issue examination reports, explain proposed adjustments, request additional information, or discuss available administrative review procedures.
Does every examination include Letter 692?
No. Examination procedures vary depending on the type of audit, the IRS operating division, and the issues involved. Not every examination includes the same correspondence.
Received IRS Letter 692?
An examination conference can be an important opportunity to understand the IRS's position, clarify unresolved issues, and determine the next steps in your audit. Preparing thoroughly and understanding your rights can help you make informed decisions as the examination moves toward completion.
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