If Your Tax Return Is Accepted, Can You Still Get Audited?

Receiving notification that your tax return has been “accepted” by the Internal Revenue Service (IRS) can bring a sense of relief, but an accepted return can still be selected for an audit. Acceptance is the initial step in processing, confirming only that the return has passed a basic, automated screening. It does not mean the IRS has reviewed or verified the accuracy of the figures, deductions, or credits you claimed, and the possibility of an examination remains open.

The Meaning of an Accepted Tax Return

When you file a tax return, particularly electronically, the first status update you receive is “accepted.” This means the submission has passed a preliminary, automated check for fundamental requirements. The IRS computer systems scan the return to ensure it includes information like a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) that matches their records, along with basic formatting and required forms.

This acceptance is a technical confirmation that your return has been received and entered into the IRS processing queue. The system is not, at this stage, evaluating the substance of your return. It does not verify that the income you reported matches third-party information from employers or banks, nor does it assess the legitimacy of your claimed deductions and credits.

Acceptance confirms the return is complete enough to be processed, but it is not an “approval” of the information contained within it. An approved return, a subsequent status, indicates the IRS has processed the return and any associated refund. Even after approval and receiving a refund, the possibility of a more detailed examination, or audit, still exists.

The Audit Selection Process

After a return is accepted, it is subjected to an analytical process that determines whether it warrants further review. The primary tool the IRS uses for this is the Discriminant Information Function (DIF) system. The DIF is a computer program that assigns a numeric score to each tax return based on statistical formulas that help identify returns with a high potential for containing errors.

A high DIF score does not automatically trigger an audit, but it does flag the return for human review. An experienced IRS classifier then examines the return to determine if an audit is necessary. They consider factors the computer cannot, such as attached statements or explanations, to decide whether to forward the return for examination or accept it as filed.

Beyond the DIF system, returns are selected for other reasons, including:

• Document-matching programs that compare your reported income against information returns like Form W-2 and Form 1099.
• Association with another taxpayer who is currently under audit, such as a business partner.
• Random selection.
• Targeted compliance projects that focus on specific industries or tax issues.

Timeframes for an IRS Audit

The IRS operates under specific time limits, known as the statute of limitations, for initiating an audit. For most tax returns, the IRS has three years to assess additional tax. This three-year period begins from the date you filed your return or the tax filing deadline, whichever is later. If you file early, the three-year clock does not start until the April due date.

This timeframe can be extended to six years if a taxpayer substantially understates their gross income. A substantial understatement is defined as omitting income that amounts to more than 25% of the gross income reported on the return. For example, if you reported $100,000 in gross income but failed to include an additional $30,000, the IRS would have six years to initiate an audit.

In some situations, there is no time limit for the IRS to conduct an audit. This indefinite statute of limitations applies if a taxpayer files a fraudulent return, willfully attempts to evade tax, or fails to file a tax return at all. For instance, if a return was never filed for a particular year, the IRS can open an audit for that year at any point in the future once the delinquency is discovered.

Types of IRS Audits

Should your return be selected for an examination, the process can take one of several forms. The most common is the correspondence audit, which is conducted entirely by mail. These audits focus on a few specific items on your return, such as verifying deductions or credits, and you will receive a letter from the IRS requesting supporting documentation.

A more involved examination is the office audit. In this case, you will receive a letter asking you to bring your records to a local IRS office to meet with an examiner. Office audits are broader in scope and may cover more complex issues related to itemized deductions, business income, or rental property schedules. The notification letter will specify the years and the items being examined.

The most comprehensive type of examination is the field audit. This involves an IRS revenue agent visiting your home, place of business, or accountant’s office to conduct a review of your financial records. Field audits are reserved for complex individual or business returns where the books and records are extensive. These examinations are the most thorough and can cover multiple years of returns.