Understanding IRS Audits
An IRS audit is a review of your tax return to verify its accuracy and compliance with tax laws. The IRS may initiate an audit for various reasons, including discrepancies or errors identified during the initial processing of your return.
Impact of Receiving a Refund
Receiving a tax refund does not guarantee that you will not be audited. The IRS can still select your return for audit even after issuing a refund. This is because the audit process is separate from the refund process.
Statute of Limitations for Audits
The IRS generally has three years from the date your tax return was filed or two years from the date the tax was paid, whichever is later, to initiate an audit. However, in certain cases, such as fraud or substantial underreporting of income, the IRS may have more time to audit your return.
Reasons for Audits After Refunds
There are several reasons why the IRS may audit your return after you have received a refund:
- Mathematical or clerical errors: The IRS may identify errors in your return that affect your tax liability, resulting in an audit to correct these errors.
- Suspicious deductions or credits: If the IRS believes that you have claimed excessive or questionable deductions or credits, it may trigger an audit to verify their validity.
- Unreported income: The IRS may have information indicating that you have not reported all of your income, leading to an audit to assess additional taxes.
- Random selection: The IRS randomly selects a small percentage of returns for audit each year to ensure overall compliance with tax laws.
Consequences of an Audit
If the IRS audits your return and finds errors or discrepancies, you may be required to pay additional taxes, penalties, and interest. The amount of additional tax owed will depend on the nature and extent of the errors.
Options After an Audit
If you disagree with the audit findings, you have the right to appeal the decision. You can request a conference with an IRS manager or file a formal appeal with the IRS Appeals Office.
Receiving a tax refund does not exempt you from the possibility of an IRS audit. The IRS can still audit your return within the statute of limitations, even if you have already received a refund. If you are audited, it is important to respond promptly and provide the necessary documentation to support your tax return.
Do You Get Your Tax Refund If You Are Audited?
FAQ
What triggers an audit from the IRS?
How long after tax return do you get audited?
Does tax return accepted mean approved?
Does a large refund trigger an audit?
Will my tax return be audited if I accept a refund?
An acceptance from the IRS or an approval of a refund does not mean that your return will not be selected for audit. It is not uncommon for the IRS to audit tax returns going back three years or longer. Be assured, however, that the process is not as scary as it sounds.
Can I be audited if I’ve already received money back?
The short answer: Yes. While you might assume you can’t be audited if you’ve already received money back from your taxes, that’s a misconception. You can. The U.S. Internal Revenue Service (IRS) can audit tax returns even after it has issued a tax refund to a taxpayer.
What happens if a tax return is audited?
The IRS can audit returns for up to three prior tax years and, in some cases, go back even further. If an audit results in increased tax liability, you may also be subject to penalties and interest. Reviewing your return carefully before filing can help to minimize the odds of being audited. What Is a Tax Audit?
When does the IRS select a return for audit?
The IRS may select a return for audit if it involves issues or transactions with other taxpayers—such as business partners or investors—whose returns were selected for audit. The IRS mainly conducts its tax audits via mail or personal interviews at local IRS offices or “in the field” at your business or home. What Can Trigger a Tax Audit?