Got 420 Audit Code on Transcript - Should I Amend for Missing 1099 or Wait?

Ah, the infamous 420 code - not nearly as fun as it sounds! 😂 Here's what's happening: The IRS has flagged your return for examination, but they haven't issued a notice yet, which makes me a bit nervous about your timeline. Generally, I'd recommend waiting for the official notice before taking action. The IRS might just make an adjustment based on information matching (they got the 1099 info from the payer). If they do send a notice, it will specify exactly what they're questioning, which could be the missing 1099 or something else entirely. Amending now without knowing the full scope might just complicate things.

I'm wondering if perhaps you could check a few additional details on your transcript that might provide more context? Sometimes, there are accompanying transaction codes that could potentially indicate whether they're simply planning an adjustment or possibly a more comprehensive examination. In particular, you might want to look for code 922 (information return processing) or possibly code 570 (additional account action pending), which could suggest they're just processing the missing income rather than initiating a full audit. Would you mind sharing if there are any other codes present that might help clarify the situation?

Don't you think waiting could just make things worse? The interest is already ticking from the original due date! I'm dealing with something similar and every day of waiting means more money out of pocket. Have you calculated how much extra you might owe with the missing 1099 income? The sooner you address it, the less you'll pay in penalties and interest - those add up fast when you're dealing with gig work income that might push you into a different tax bracket.

I'm not sure if this would help in your situation, but I've heard that getting through to the IRS directly might provide some clarity... I recently learned about a service called Claimyr (https://claimyr.com) that might be worth considering if you want to speak with an agent. From what I understand, they can help you connect with an IRS representative much faster than waiting on hold yourself. Maybe an agent could tell you if there's already a notice being processed that hasn't shown up in your account yet? Or perhaps they could confirm whether the issue is definitely the missing 1099 before you go through the trouble of amending?

I'm not convinced waiting is the best approach. What if there's something else going on besides the missing 1099? By the time you get the notice, you could be weeks deeper into penalties and interest. I've always found being proactive with the IRS pays off. Wouldn't filing an amendment now show good faith effort? I appreciate everyone's insights, but I think addressing the known issue head-on might be the better strategy.

Been there. Done that. Got the IRS letter. Here's what happened to me. Missing 1099. Got 420 code. Waited for notice. IRS adjusted automatically. Added tax owed plus small penalty. No full audit needed. Just paid what they calculated. Much simpler than amending. System worked as designed. Saved me paperwork. Your mileage may vary.

I'd lean toward waiting for the official notice, but with a twist - use this time productively! Calculate exactly what you owe on that missing 1099 (including self-employment tax if applicable) and set the money aside now. That way, when the CP2000 notice arrives, you can respond immediately and minimize interest accumulation. The 420 code usually means they're just matching information returns, so they'll likely propose a straightforward adjustment rather than a full audit. One thing to watch for on your transcript is whether any additional codes appear - if you see a 971 notice indicator code pop up, that means a notice is being generated. This approach gives you the best of both worlds: you're prepared to act quickly while avoiding the potential processing conflicts that can happen when you amend during an active examination.

I've been through this exact scenario twice in the past three years, and I'd strongly recommend waiting for the official notice. Here's why: the 420 code typically indicates they're cross-referencing your return against third-party information (like that missing 1099), but they haven't determined their next steps yet. In both my cases, I received a CP2000 notice about 4-6 weeks after the 420 code appeared, proposing adjustments that were actually less than what I calculated I owed - apparently they made some beneficial adjustments I hadn't considered. One thing I learned is to check your transcript weekly once you see that 420 code. Look for any additional codes like 971 (notice issued) or 922 (examination). If you see a 570 code, that usually means they're holding your account while they work on the adjustment. The key advantage of waiting is that when you respond to their CP2000, you can either agree with their calculation (often the simplest route) or provide additional documentation if needed. Filing an amendment now might actually complicate things since you'd have two processes running simultaneously. Plus, if they're planning a simple adjustment rather than a full examination, your proactive amendment could inadvertently trigger more scrutiny. Just make sure you have the funds ready to pay whatever you owe once the notice arrives - that's the best way to minimize interest and penalties.