How to Handle a Dental Practice Audit in Connecticut: What to Expect
September 14, 2026
Few pieces of mail cause more immediate anxiety for a dental practice owner than a letter from the IRS or Connecticut’s Department of Revenue Services announcing an audit. The instinct to panic is understandable, but an audit is rarely a sign that something has gone terribly wrong, and how a practice responds in the days that follow matters far more than the letter itself.
At LLI Advisory Group, we have guided Connecticut dental practices through this exact process for over two decades, and we know that the practices who come through an audit with the least disruption are the ones who understood what to expect before the first document request ever arrived.
Why Dental Practices Get Selected for an Audit
According to the IRS, being selected for an audit does not necessarily mean a problem has been found. Returns are often flagged through random selection and computer screening, where a filing is compared against statistical norms built from a sample of similar returns, or through related examinations tied to a business partner or vendor whose own return was already under review. For dental practices specifically, factors like cash payments, high equipment purchases, and complex entity structures can sometimes draw additional scrutiny simply because they create more line items to verify.
Connecticut practices face this reality from both directions, since a state audit through the Department of Revenue Services can proceed independently of any federal review, and the two do not always move on the same timeline or ask for the same documentation.
What Triggers a Closer Look
A few patterns tend to show up more often in dental practice audits than in other small businesses. Significant swings in reported income from one year to the next, deductions that fall well outside the typical range for a practice of similar size, and inconsistencies between reported revenue and bank deposit activity are all common triggers. None of these automatically mean anything improper occurred, but they are the kinds of items an examiner is trained to flag and ask about.
How You Will Be Notified
The IRS is direct on this point: an audit will always begin with a letter, never with a phone call. If you receive a call claiming to be the IRS demanding immediate payment or information, that is a red flag for fraud rather than a legitimate audit notice. Connecticut’s Department of Revenue Services follows a similarly formal notification process, and any legitimate request for documentation will come through official written correspondence with clear instructions.
What to Expect Once the Audit Begins
Most audits proceed either by mail, where the examiner requests documentation on specific line items, or through an in-person interview at an office, your practice location, or your accountant’s office. The scope of what gets reviewed generally reaches back three years from the date the return was filed, though a substantial discrepancy can extend that window further.
Once a request arrives, the practice needs to gather the specific records asked for, not necessarily every financial document that exists. Overproducing documentation can be just as problematic as underproducing it, since it invites the examiner to look more broadly than the original scope of the request. Having organized, dental-specific financial statements and clear documentation for every deduction claimed puts a practice in a fundamentally stronger position than trying to reconstruct that picture after the letter has already arrived.
- Requested documents: The examiner will specify exactly which records are needed, and requests generally correspond to specific figures on the return rather than a blanket request for everything.
- Response deadlines: A written response is expected by the date on the letter, though a one-time extension is typically available if requested before that date passes.
- Representation rights: You are entitled to have a CPA or other authorized representative communicate with the examiner directly on your behalf throughout the process.
- Resolution outcomes: An audit concludes with no change, an agreed adjustment, or a disagreement that can be appealed through a formal conference or mediation process.
Understanding these mechanics ahead of time keeps the process from feeling as unpredictable as it otherwise might.
How LLI Advisory Group Supports Connecticut Practices Through an Audit
Gerard Iacovano, CPA, has described our role as being the ones a client calls first when something financial or operational comes up, not because we claim to have every answer immediately, but because we know who to bring in and how to move quickly. That philosophy applies directly to audit situations. We provide IRS and state audit representation as part of our ongoing work with Connecticut dental practices, which means when a notice arrives, you are not managing the correspondence, the document requests, or the examiner conversations without guidance.
Our familiarity with dental-specific financial statements and industry benchmarks means we can speak directly to whether a flagged item reflects a genuine anomaly or simply the normal variation you would expect to see across hundreds of comparable practices. If a state audit and a federal audit happen to overlap, we help coordinate the response so the two processes do not work against each other. And because our tax and accounting services are built around ongoing, organized recordkeeping throughout the year rather than a scramble at filing time, most of our Connecticut clients are already in a strong position well before any letter arrives.
For practices that want a broader look at their financial health beyond audit readiness, our practice advisory services help identify the kinds of inconsistencies that might otherwise draw attention, and our practice valuation and transition team understands how an open audit can affect the timing of a sale or transition if one happens to be on the horizon.
Facing an Audit? LLI Advisory Group Is Ready to Help
An audit letter does not have to derail your practice or your peace of mind. What it requires is a clear, organized response built on records that were already in good shape long before the letter showed up. Whether you are a newer Connecticut practice still building your financial foundation or an established owner facing your first audit notice, our team at LLI Advisory Group brings the dental-specific experience to guide you through it.
We do not just respond to audits. We help make sure our clients are rarely caught off guard by one in the first place. Contact LLI Advisory Group to talk through your situation and get ahead of the process.