What Does It Mean if My IRS Tax Refund Is Under Review

Allison Martin
tax forms

Have you been anxiously awaiting your refund only to find out it is being delayed by the IRS? Don't fret. Here's what this means and what to do about it.

Why It Is Under Review

When the IRS officially places your return under review, you will receive a CP05 notice, and the processing of your refund will be delayed until the review is complete. According to the IRS website, a number of distinct factors can trigger the review, including the need to verify the following entries on your return:

  • Income is not overstated or understated.

  • Tax withholding amounts are correct.

  • You have the right to claim the tax credits on your return.

  • Social Security benefits withholding amounts are correct.

  • Household help is accurately reported.

  • Schedule C income is not overstated or understated.

To confirm the accuracy of the contents, the IRS may contact third parties.

Review Triggers

There is no hard and fast way to determine why your return was selected for a review. According to IRS.gov, "returns [are selected] for examination using various methods which include random sampling, computerized screening, and comparison of information received by the IRS such as Forms W-2 and 1099." If your return is selected for a review, it doesn't necessarily indicate or suggest you made a mistake or deliberately misreported your informaiton.

Upon receiving the CP05 notice, the IRS recommends you take the follow steps if you have additional questions or concerns:

  • Consult with your tax preparer to gain a better understanding of the notice.
  • Call the toll-free number listed at the top of the notice to receive additional information.
  • Call the Taxpayer Advocate Service (TAS) hotline at 1-877-777-4778 if you believe your return has been selected in error due to the inadequate screening of IRS systems.
  • Authorize a professional tax preparer or accountant to communicate with the IRS on your behalf by submitting Form 2848 (Power of Attorney and Declaration of Representative).

How to Avoid Reviews

To possibly decrease your chances of being reviewed, be sure to report all information in the most truthful manner possible. Also, be mindful of common audit triggers.

When the Review Is Complete

Once the review is complete, the IRS will make the necessary adjustments and issue your refund accordingly.

Time Frame

The IRS encourages taxpayers to wait at least 45 days from the day you receive the CP05 notice to follow up about the status if you haven't yet received your refund. Use the number found on the notice to ensure you are routed to the correct department.

IRS Audits

Your return could also be selected for a tax audit. If the auditor that initially reviews your return thinks it is necessary to conduct a more thorough examination, it will be forwarded to an examining group and reviewed by a manager to determine if it is best to move forward with a full-fledged audit or accept the return as is. Tax audits are either performed via mail or in-person. See the IRS Audit FAQs for additional information.

If You're Flagged for Review

If your return is flagged for review, remain calm. Cooperate with the IRS (if they request additional documentation) to ensure your return is processed in the most seamless and rapid manner possible.

What Does It Mean if My IRS Tax Refund Is Under Review