IRS Transcripts

Code 424 on Your IRS Transcript: What It Means and What to Do (2025)

By Angeline Balsitis, EA · Reviewed by Melissa Ly, Chief Tax Officer · Updated November 21, 2025 · Editorial Standards

What code 424 on your IRS transcript actually means

Transaction code 424 is the "Examination Request Indicator." When you see code 424 on your IRS transcript, it means the IRS pulled your return out of normal processing and sent it to the Examination department to decide whether it should be audited. Think of it as a flag, not a verdict.

The IRS uses transaction codes to track everything that happens on your account. You can read these on your account transcript, which lists each action with a three-digit code, a date, and a dollar amount. The IRS explains how to request and read these records on its Get Transcript page, and our own walkthrough on how to read an IRS account transcript breaks down the most common codes line by line.

A 424 by itself does not mean you did anything wrong. Returns get flagged by an automated scoring system, by random selection, or because something on the return didn't match the income records the IRS already has on file.

Code 424 vs. code 420: the difference that matters

These two codes get confused all the time, so here is the plain-English version:

• Code 424 — examination request. Your return was referred to Examination to review whether an audit is warranted. This is the "maybe" stage.
• Code 420 — examination indicator. The return has actually been selected and assigned for audit. This is the "yes" stage, and it's usually followed by a letter telling you what's being examined.

If you see a 424 but a 420 never appears, that's often good news — it can mean the IRS looked at the referral and decided not to audit. If a 420 does follow, you're now in an audit and the clock starts when the examination letter arrives.

What happens next — and what could follow

The IRS system is automated and quiet. A 424 can sit on your transcript for weeks or months while a reviewer works through the referral. Here's the range of outcomes, from best to most involved:

1. The 424 closes with no action. The reviewer decides not to audit. You may see the code reverse, and any held refund is usually released.
2. The 424 converts to a 420. Your return is selected for examination. Expect a letter naming the tax year and the items under review.
3. Audit by mail (correspondence exam). The most common type — the IRS asks for documents to support specific deductions or credits.
4. Field or office audit. Less common, more in-depth. You meet with an examiner or they request a broader records review.
5. Proposed change to your tax. If the audit finds an issue, the IRS proposes additional tax, penalties, and interest. You can agree, provide more proof, or appeal.

One more thing about timing: a return under examination review often has its refund held until the review finishes. That hold is one of the most common reasons people notice a 424 in the first place — they were tracking a refund that stalled.

How far back can this go?

The IRS generally has three years from the date you filed to audit a return, though that window can stretch to six years if a large amount of income was left off, and there's no limit at all for fraud or an unfiled return. Our guide on how far back the IRS can audit covers the exceptions in detail. The point: a 424 usually relates to a recent return, but don't assume an older year is off the table.

How to respond to code 424, step by step

1. Pull your full transcript. Get both your account transcript and your wage and income transcript through your IRS online account. The wage and income transcript shows the W-2 and 1099 data the IRS has on file — compare it to what you reported.
2. Find the return in question. Note the tax year tied to the 424 and locate your filed return and supporting documents for that year.
3. Gather proof for every number. Receipts, mileage logs, charitable acknowledgments, 1099s, business records — anything that backs up the income, deductions, and credits on that return.
4. Watch for a letter. If the 424 becomes a 420, an examination letter follows. Read it carefully — it tells you exactly what the IRS is reviewing and your response deadline (often 30 days).
5. Respond on time, completely. If you get an audit letter, send organized copies (never originals) by the deadline. If you disagree with a proposed change, you have appeal rights, and audit reconsideration may even reopen a closed exam later.
6. Get help if the year is complicated. If you had business income, large deductions, or missing records, a professional review before you respond can keep a small question from becoming a big bill.

If money is the worry — say the audit could turn into a balance you can't pay — know that having a tax debt and being audited are two separate problems with separate fixes. Worried about what an adjustment might cost? Our overview of how IRS penalties add up shows the math before you get there.

What code 424 does NOT mean

Let's clear up the fears that send people searching at midnight:

• It's not a criminal charge. A 424 is a routine civil examination flag, not a fraud referral.
• It's not a bill. No money is owed because of a 424 alone. A balance only appears if an audit later proposes a change.
• It's not a guarantee of an audit. Plenty of 424s close without ever becoming a 420.
• It's not something a phone call or email will warn you about. The IRS contacts you about an exam by mail. Anyone calling, texting, or emailing claiming you "must verify" because of a transcript code is a scammer — see does the IRS call you.

Code 424 questions, answered

This guide is general information, not tax or legal advice for your specific situation. Eligibility for IRS programs depends on individual facts and circumstances; no outcome is guaranteed.

Related: How to read an IRS account transcript · How far back can the IRS audit · Audit reconsideration · or browse all guides.