Whether you file your tax return on your own in the mail, through an accountant, or using tax preparation software, getting an acceptance from the IRS is easy. Your return is deemed "accepted" as soon as the IRS receives and processes it. If your tax return is accepted, and if you're entitled to a refund, your tax return may be marked "approved" for purposes of releasing the funds. 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.
If a tax return has been accepted by the IRS, it simply means that it has met the requirements for submission; accepted returns can always be audited.
Finding More About An IRS Audit
An IRS audit is a process in which the IRS reviews your income tax returns and supporting documentation to make sure everything is correct. Essentially, the IRS "accepted return but not approved" status will likely lead to an audit. In some cases, the audit may be conducted entirely by mail; for example, the IRS may review your return and realize a supporting document is missing. It then sends you a written request for the missing documentation, and after you supply it, your audit may be completed without any further action.
Other audits require more information, which necessitates an in-person interview. If an interview is required, the IRS conducts the interview either at your house, at a local IRS office or at your accountant's office. If you're a business owner and your business return is being audited, the interview may occur at your place of business. An IRS agent reviews your documentation and tax return with you and asks questions about certain items.
Agents who conduct audits must follow protocols called Audit Techniques Guides. They are available at the IRS website for taxpayers to review. These guides can be helpful in providing you with an idea of how your audit will be conducted.
Why Returns Are Audited
Audits are not always the result of a suspicion of fraud or wrongdoing. The IRS may choose your tax return at random to audit, or it may use a statistical formula based upon a comparison of your return to similar returns. If you're a business owner and your business partner is audited, the IRS may audit your return as part of a comprehensive review. With that in mind, if you have been wondering, "My tax return was accepted, when will it be approved?", you may discover that you have been selected for an audit.
When your tax return is selected for audit, you are contacted by mail and notified of the audit. An auditor reviews your return and either accepts it if there are no issues or forwards it to an examining group for further review. The IRS will never initiate contact with you over the phone. If you receive a phone call from a person purporting to be with the IRS but you did not receive anything in the mail first, do not provide that person with information. Instead, hang up and call the IRS directly to confirm.
Obtaining Help If You Are Audited
If you are selected for an IRS audit, you are entitled to hire someone to represent you, such as an accountant. Some tax preparation companies, such as H&R Block and TurboTax, have audit-defense services. You may also choose to represent yourself in the audit process. The IRS will make very specific requests for documentation and information, and you must comply with these requests. If the audit shows that you owe more taxes, you are assessed and have to pay those taxes. Sometimes, an audit results in a refund.
If you disagree with the result of an audit, you can either file an appeal, enter the IRS mediation process or request a conference with an IRS manager.
- IRS.gov: IRS Audits
- IRS.gov: Audit Techniques Guides (ATGs)
- IRS.gov: Appeals Mediation Programs
- Internal Revenue Service. "Charity and Nonprofit Audits: Correspondence Audit." Accessed Nov. 3, 2020.
- Internal Revenue Service. "IRS Audits." Accessed Nov. 3, 2020.
- Community Tax. "IRS Tax Audit Penalties." Accessed Nov. 3, 2020.
Rebecca K. McDowell is an attorney focused on debts and finance. She has a B.A. in English and a J.D. She has written finance and tax articles for Zacks and eHow.