420 | Examination initiated
This code indicates the IRS has initiated an examination process for the tax return.
What This Code Means
Code 420 appears when the IRS has opened an examination, commonly referred to as an audit, for the tax period listed. It reflects that the return has been selected for further review beyond standard processing. This code does not provide details about the scope or outcome of the examination; it simply indicates that an examination process has begun. The presence of code 420 does not automatically imply wrongdoing. It signals that additional review procedures are underway.
Where Users Usually See This Code
- On an IRS account transcript under transaction codes
- After a return has been flagged for examination
- During review of tax account activity for a specific year
Why This Code Appears
- The return was selected for examination based on IRS criteria
- System review flagged items for further scrutiny
- Referral from another review unit occurred
- Compliance verification procedures triggered examination
What Typically Happens Next
- The IRS may issue correspondence regarding examination details
- Processing of refunds may pause depending on circumstances
- Additional transcript codes may post reflecting examination actions
What This Code Is Not
- It is not a final determination of liability
- It is not a refund issuance code
- It is not confirmation of penalties or changes
Troubleshooting Checklist
- □ Review transcript updates for related examination codes
- □ Monitor official IRS correspondence for details
- □ Maintain records relevant to the tax period in question
- □ Consult official IRS resources if clarification is needed
Notes And Edge Cases
Examinations vary in scope and duration. Code 420 alone does not specify whether the examination is correspondence-based or field-based. The timing of related transcript updates can depend on the examination unit handling the case. The presence of code 420 does not automatically result in account changes until review actions are recorded.