IRS audits, or civil examinations, are conducted based upon the type of taxpayer, the scope of the examination, and the complexity of the tax return. All taxpayers are expected to provide supporting documentation with regard to questionable items. Examinations may be conducted by correspondence, telephone, or through field interview. Business returns are typically examined in an office or field interview rather than by correspondence because of the complexity of the issues involved in a business audit. In this article, I discuss the different types of audits along with their similarities and differences.
Correspondence audits, otherwise known internally by the IRS as a Campus Examination, are the most basic type of audit. Correspondence audits involve less technical tax issues and can be completed, much like their name implies, through the mail. As the IRS notes, the purpose of a correspondence audit is to resolve tax problems quickly and easily through correspondence and/or by telephone. “[E]xaminers at the correspondence and office levels are much less invasive”. The examining agent is required to process many cases without much familiarity with the return itself. It is often the case that the examiner has not reviewed the taxpayer’s file and the return after the taxpayer has replied to the agent’s correspondence. The agent will generally review the taxpayer’s file on the day of the interview.
Office audits, or Area Office (AO) Examinations, are face-to-face audits that are conducted at the office of an IRS revenue agent. They are typically appropriate for somewhat complicated issues, which may include small business returns and complex non-business returns. Office audits may also be conducted by either correspondence and/or office interview.
In general, examination of a taxpayer’s income tax return falls initially under the responsibility of an area office where the taxpayer resides, conducts business, or maintains a principal office. The responsibility for the examination is assigned to “an examiner at the post-of-duty nearest to the taxpayer’s residence or place of business.” If it becomes necessary to transfer a return to an office within another area after the examination process has begun, the convenience of the taxpayer will be taken into consideration as long as the transfer process aligns with “sound and efficient tax administration”.  However, what typically controls the decision-making with regard to the transfer of a case between area offices is the location of the taxpayer’s records, the purpose of principal investigative work, and where the taxpayer’s issues can be resolved most efficiently. These factors will overrule the taxpayer’s request for a case transferal.
With this in mind, a taxpayer’s case may be transferred (back) to the Area Office or between area offices. When the case is transferred, it receives audit reconsideration. “The examiner in the CRU will send a case to the area examination function to be worked if the taxpayer requests a face to face examination, and/or [if] the completion of the case requires an examination of books and records, and/or [if] the CRU has not received the training to work the reconsideration issue(s)”. Regarding face-to-face examinations, the Central Reconsideration Unit (CRU) receives those tax returns that were previously examined by the Area Office or Campus Examination function.
In this respect, the purpose of the audit reconsideration process is to examine those tax issues previously overlooked. For example, if “the taxpayer presents new information that was not previously considered, [IRS employees] evaluate that information and determine if a change to the assessment is warranted.” The Area Office function will then make that change.
 See: http://www.mbbp.com/resources/tax/irs_tax_audit.html
 Area Office Examination is a term commonly used in the Internal Revenue Manual, but it refers to office audits here for the sake of this discussion.
 The acronym CRU stands for Central Reconsideration Unit.