Not every taxpayer receives a refund timely. An audit might delay the deposit, and, in some cases, the audit’s conclusion could leave a taxpayer with a balance, among other woes. A taxpayer may feel relief after receiving a refund at their Texas residence. Don’t assume everything ends after a refund’s issuance. The IRS could “revisit” an account and perform an audit later.

Audits after refunds

Although the IRS could issue a refund, something may arise that leads to an audit. Perhaps 1099s turning up one year later may result in an underreported income audit. New information might raise doubts about deductions. Generally, the IRS has three years to perform an audit, but significant problems could open doors for an examination six years after the tax return’s filing, possibly longer.

When the IRS issues a refund and a later audit leads to owing a balance, the IRS will attempt to collect. Sometimes, the amount could be relatively small or many times the refund amount. The IRS may uncover fraud in some cases, leading to a criminal investigation.

Going through the audit process

Properly preparing a return could eliminate the various errors that might lead to an audit. However, an audit may be unavoidable under any circumstance. Taxpayers might panic upon receiving an audit notice, but providing the tax agency with specific evidence might result in a favorable outcome. In other scenarios, a strategic audit defense could be necessary.

The appeals process may work for someone whose initial response to an audit resulted in disappointment. An appeal could present the necessary evidence showing an auditor’s error, resulting in a preferable and fair outcome for the taxpayer.