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.

I went through this exact situation two years ago with my Schedule C business expenses. My transcript showed absolutely nothing, but I got a letter requesting documentation for my vehicle deductions and office supplies. It was so confusing at first! What I learned is that the IRS has automated systems that flag certain returns during the initial intake process - before they even hit the main processing queue. They call it "pre-refund verification" and it's actually more common than you'd think, especially for returns with business deductions, home office claims, or certain tax credits. The good news is that these pre-processing reviews are usually much faster and less invasive than actual audits. I organized all my receipts, mileage logs, and supporting documents into clearly labeled folders with a cover letter explaining each category. Sent it in within two weeks and my return was processed normally about a month later. Pro tip: Keep digital copies of everything you send them. The IRS has been known to "lose" documentation, and having backups saved me when they asked for the same info again six months later due to a clerical error on their end.

This is actually really reassuring to read everyone's experiences! I was starting to panic thinking something was seriously wrong with my return. It sounds like this "pre-refund verification" is way more common than I realized. I do have all my documentation organized - I keep separate folders for home office expenses (utilities, repairs, etc.) and all my mortgage interest statements from my lender. I'm actually pretty meticulous about record-keeping because I've heard horror stories about IRS reviews. What's frustrating is that nowhere on their website or in their communications do they clearly explain this process. They just say "we're reviewing your return" without explaining that this happens BEFORE processing, not after. No wonder so many people get confused and stressed out! I'm going to respond with my documentation this week. Hopefully it goes as smoothly as some of your experiences. Thanks for sharing - it really helps to know I'm not alone in this weird limbo state!

This thread has been incredibly helpful! I'm dealing with a similar situation right now - got a verification letter about my home office deduction while my transcript shows nothing. Reading everyone's experiences makes me feel so much better about the whole process. One thing I'm wondering about is timing - for those who've been through this pre-refund verification, how long did it typically take from when you sent in your documentation until your return actually showed as processed on the transcript? I'm trying to plan for some major expenses and need to know if I'm looking at weeks or months of delay. Also, did anyone find that having this verification review made them more likely to get flagged for future reviews? I'm hoping this is just a one-time thing and not something that puts me on some kind of watch list for next year!