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I've never been audited by the IRS, but I was just curious if the fact that I received my tax refund in any way indicates that I am less likely to be audited this year.

My presumptive theory is that if the IRS found any reason or randomly selected my return for audit they would have held my refund until they had time to complete it.

Now, I'm sure that they can choose to audit you at anytime for this and previous year's returns, but my question really is this: Is the fact that I got my refund check without any notice of an audit an indicator that I'm less likely to be subject to an audit that year, or is it just as likely that the would call me 6 months from now?

That is, did I get past a decision point in their workflow where the generally decide to audit or not to audit at this point?

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    I have family in a state department of revenue. There are floors with which they couldn't care less what you do because it costs more to pursue than the collection would capture. Additionally, audits are triggered when one year over another is wildly different. I assume (but don't know) that the IRS is similar. I also assume they would never tell us if that is true or not. – MrChrister Mar 20 '14 at 22:16
  • The refund is sent soon after the IRS determines that there are no arithmetic errors on the numbers you put down on your tax return. The checks that you actually reported all your income (cross-check with Copy A of W-2 and 1099 Forms) and made the major adjustments (e.g. IRA deductions) correctly are done later in the year after the IRA custodians have reported on the IRA contributions received. The IRS has 3 years after the filing deadline (or extensions if you requested them) to check on other issues. And Yes, you can be audited even after you got a refund, and assessed additional tax. – Dilip Sarwate Mar 20 '14 at 22:27
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    @Dilip Sarwate Why not make than an answer? – JohnFx Mar 20 '14 at 22:28
  • "Why not make than an answer?" I am not sure about the details and I expect littleadv or JoeTaxpayer to chime in soon with the definitive answer possibly citing chapter and verse too. But the three years period for audits is correct, and if you understated your income by more than 25% (can happen with self-employed people and those paid under the table), the statute of limitations is much longer. – Dilip Sarwate Mar 20 '14 at 22:30
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    Those guys do tend to do that. – JohnFx Mar 20 '14 at 22:31
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The fact that you got your check doesn't mean you're not going to be audited. It just means that your return was properly filed and accepted.

Audit notices usually start to appear at about half a year after returns are filed, and come as late as 3 years after.

In fact, your tax return can be audited many years after you filed it, if the information on it affects a future year tax liability (for example - depreciation deduction, passive activity, NOL, capital losses, foreign tax credits, and many other things that can stretch into the future).

  • I mentioned this in my question, but I do realize I'm not off the hook just because I got my check. I was really asking whether the majority of audits are done before sending refund checks (since it would be harder to get money back if they find a problem later). Trying to figure out if the odds go down at all once I've got check in hand. – JohnFx Mar 21 '14 at 22:25
  • @JohnFx Audits are never done before sending refunds checks. – littleadv Mar 21 '14 at 22:43
  • To further illustrate the difference between the clerical and enforcement arms of the IRS, note the case of Wesley Snipes, the actor. He submitted an amendment to his 1996 and 1997 tax returns requesting a tax refund of millions of dollars and decided not to file for 1999-2004. The IRS initially complied and sent him the refund. The refund was subsequently found to be based on nonsense tax protestor legal "theories" and determined fraudulent, resulting in millions of dollars in fines and three years in prison. – Paul Mar 22 '14 at 7:05
  • @Paul but that's not exactly the same. Amendment refunds can be delayed until after examination. In fact, the IRS is under no obligation to accept amendments at all, as opposed to the original tax returns. – littleadv Mar 22 '14 at 7:08

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