Understanding the nuances of how the IRS processes tax returns is crucial for taxpayers. One term that often causes confusion is “accepted,” as many mistakenly equate it with approval or finality.
This article explores what being “accepted” by the IRS truly means and why it’s important to differentiate it from other stages in the tax return process.
Meaning of “Accepted” in IRS Terms
When the IRS marks a tax return as “accepted,” it means the return has passed initial checks for basic errors and inconsistencies. This ensures the return is complete and the taxpayer’s identity is verified. Automated systems confirm Social Security numbers, match names, and check that required forms are included, reducing identity theft and allowing the return to advance to further processing.
However, acceptance does not mean the IRS has reviewed the return for accuracy or compliance with tax laws. It simply indicates the return is ready for a more detailed evaluation, which may include reviewing deductions, credits, and income declarations. For instance, if a taxpayer claims a large charitable deduction, the IRS may later request supporting documentation. Acceptance is just the first step in a potentially extensive process.
Acceptance also starts the timeline for processing refunds. Taxpayers who file electronically and choose direct deposit typically receive refunds in less than 21 days after the IRS receives the e-filed return, though some returns take longer if selected for additional review.1Internal Revenue Service. IRS Announces Jan. 27 Start to 2025 Tax Filing Season
Acceptance Versus Approval
The distinction between acceptance and approval is critical. Acceptance means a return has passed preliminary checks, while approval involves a detailed review to confirm that the information complies with tax laws and regulations, such as the Internal Revenue Code and Treasury Regulations. For example, if a taxpayer reports capital gains income, the IRS ensures the correct long-term capital gains rate was applied for that taxpayer’s situation.
Approval often hinges on verifying specific claims and deductions. For instance, if a taxpayer claims an education credit, the IRS may request documentation like Form 1098-T to confirm eligibility. High-value deductions or credits may also be flagged for closer scrutiny using algorithms to identify returns that deviate from statistical norms. This review process is where discrepancies are most likely to arise, potentially leading to audits or requests for additional information.
Possible Adjustments After Acceptance
Taxpayers often assume their filing obligations are complete once a return is accepted, but the IRS may still make adjustments. A common adjustment involves correcting math errors. If a taxpayer miscalculates taxable income or credits, the IRS can make corrections without initiating an audit. For example, if a taxpayer miscomputes their earned income credit, the IRS will adjust the amount based on accurate figures, as outlined in Section 6213(b)(1) of the Internal Revenue Code.2U.S. House of Representatives, Office of the Law Revision Counsel. 26 U.S.C. § 6213 Taxpayers are notified of such changes and can either accept the correction or contest it with supporting evidence.
Adjustments may also result from changes in tax laws or updated IRS guidance issued after filing. For example, if Congress enacts mid-year tax relief, such as a temporary increase in the standard deduction, the IRS may adjust returns to reflect these changes. Taxpayers should stay informed through IRS announcements or consult tax professionals to understand how such changes might impact their filings.
Discrepancies in third-party information can also lead to adjustments. The IRS cross-references information from W-2s and 1099s with taxpayer filings. If a mismatch is found, such as unreported income on a 1099-MISC, the IRS will adjust the return to include the income, which could alter the taxpayer’s liability. Notices are issued to inform taxpayers of these changes, providing an opportunity to address any discrepancies.