Can IRS Start an Audit Before My Return Shows as Processed on Transcript?

YES! This EXACT thing happened to me last month and it's absolutely infuriating! 😡 My transcript was showing nothing for 2023, then suddenly I got a letter asking for documentation on my business expenses. No warning, no processing status, NOTHING. I'm still scrambling to get everything together before their ridiculous deadline. I think the IRS has completely different systems that don't talk to each other properly. The review department probably pulls returns before they're fully entered into the transcript system. It's a complete mess and makes planning impossible.

I've been through this twice in the last three years. The first time was for my rental property deductions and the second was for some stock sales. Both times my transcript showed nothing while they were actively reviewing my documents! What I learned is that the IRS has something called "pre-refund verification" that happens during initial processing. I now keep EVERYTHING organized by category with summaries on top just in case. Last time I sent them a binder with labeled tabs and a table of contents. They processed it in 2 weeks with no changes to my return. Do you have all your documentation ready? I'm wondering if my organization system actually helped speed things up?

According to the IRS operations manual (available on irs.gov), there are multiple verification stages that happen before a return is considered "processed" in their master file system. What you're experiencing is completely normal but incredibly frustrating when you need to speak with someone. I was in the same situation last month - transcript showing nothing but got a verification letter. Spent 3 days trying to reach someone at the IRS with no luck. Finally used Claimyr (https://youtu.be/_kiP6q8DX5c) and got through to an agent in about 15 minutes who confirmed my return was in the verification department. They explained exactly what was happening and what I needed to provide. Saved me days of stress and uncertainty.

I believe what you're experiencing is part of the IRS Return Integrity Verification Operations (RIVO) process. This might include: 1. Initial return screening (happens before processing) 2. Automated filters for certain deductions or credits 3. Manual review by an examiner 4. Determination to process normally or request documentation Your return is likely in stage 3 or 4, which occurs before the return is considered "processed" in the transcript system. This isn't technically an audit - it's a verification review. A true audit would come after processing is complete. I would recommend responding promptly with organized documentation for whatever they're questioning. These pre-processing reviews are usually much simpler to resolve than formal audits.

Oh man, I'm going through something similar and it's my first time filing with a home office deduction. Got a letter last week asking for "verification" but my transcript is empty! 😅 Kinda freaking out here. My cousin ignored one of these letters thinking it was a scam (I mean, who contacts you about a tax return that doesn't exist in their system, right? lol). BIG mistake. They ended up denying his entire refund and he had to file an amended return with all the documentation, which took like 8 months to process. Don't be like my cousin! Respond ASAP with everything they ask for!

It might be helpful to know that what you're experiencing isn't technically an "audit" in IRS terminology. It's likely what they call a "compliance review" or "documentation request" which happens during initial processing. True audits generally occur after a return is fully processed, often months or even years later. These pre-refund reviews are actually somewhat less concerning, as they're usually focused on specific items rather than your entire tax history. If I were in your position, I would probably just provide the requested documentation promptly and clearly labeled. These reviews are fairly routine, especially for returns with home office deductions, and typically resolve quickly when you provide organized documentation.