An examination (audit) has been opened on this return. Here is what it means, what usually happens next, and what to do.
On your account transcript it reads: 420 Examination of tax return Hold or watch
TC 420 means your return has been opened for examination — an audit. Many 420s are correspondence examinations handled by mail about one or two items (a credit, a deduction, an income item), and some close without any change. The amount is usually $0.00.
Reversal code: TC 421 — Closed examination of tax return. When it posts after this code, the effect above is undone.
Also written as: IRS code 420, code 420 on transcript, 420 IRS code, transaction code 420.
An examination letter follows if you have not received one — Letter 566 or similar asking for documents, or a report proposing changes (Letter 525). The examination ends with TC 421. Proposed changes post as TC 300 (tax assessed by examination) or TC 301 (tax abated). A refund on the year generally waits until the examination closes.
| On the same transcript | What it usually means |
|---|---|
| 420 alone | Examination opened; a letter is coming or has arrived. |
| 420 → 421 with no 300 | Closed with no change. |
| 420 → 300 → 421 | Closed with additional tax assessed. |
| 424 then 420 | The return was first pulled for consideration, then an examination was opened. |
Correspondence examinations are decided on what you send; a missed date turns a proposal into an assessment.
Copies, not originals, keyed to each item questioned.
You can disagree with proposed changes in writing and ask for Appeals; the 30-day letter explains how.
Paste it into the free decoder — every code explained, open holds flagged, refund and offsets summarized. Runs in your browser; nothing is sent anywhere.
Decode my transcript →Yes — it is the examination indicator. Many are limited correspondence audits handled entirely by mail.
The examination is closed. If no TC 300 posted, it closed without changing your tax.
On your IRS account transcript for the tax year — in your IRS Online Account under tax records, or by mail using Form 4506-T. The transactions section lists each code with its description, date and amount. Return transcripts do not show transaction codes.
Yes. IRS code 420, code 420 on transcript, transaction code 420 and TC 420 all refer to the same three-digit transaction code the IRS posts to your account.