TC 300: How an Audit Assessment Looks on Your Transcript

If you have been audited, the result lands on your account transcript as a TC 300. If you have not been audited and you see one, that is a problem you need to understand immediately.

Here is how to read an exam assessment and the codes that surround it.

The definition

Document 6209 titles TC 300 "Additional Tax Assessment by Examination or Appeals" and says it "assesses additional tax as a result of an Examination or Appeals Adjustment to a tax module which contains a TC 150 transaction." Its valid document code is 47, the examination adjustment code.

The same entry says TC 300 "generates TC 421 to release 42 Hold" when certain disposal codes are present along with an open TC 420 or TC 424 exam indicator. So the exam assessment and the exam closure are often linked on the transcript. A TC 300 followed by a TC 421 usually means the exam is closed and the result assessed.

The sequence to look for

A normal examination of an individual return leaves a trail. Here is the order the codes tend to appear in.

Not every case has every line. An agreed audit may skip the notice of deficiency entirely. A case that went to Appeals or Tax Court may show additional lines. But the pattern is consistent enough that missing pieces are worth asking about. See TC 420 and TC 421.

The notice of deficiency and your Tax Court window

Document 6209 defines TC 494 as indicating "that a Statutory Notice of Deficiency (90-day) was issued," and TC 495 as the closure of that notice or a correction of one processed in error.

That notice is the gateway to the Tax Court. IRC 6213(a) gives you 90 days, or 150 days if the notice is addressed to a person outside the United States, to petition the Tax Court for redetermination. During that period, and while a timely petition is pending until the decision becomes final, the IRS generally cannot assess the deficiency or levy to collect it. If you do not petition in time, IRC 6213(c) says the deficiency "shall be assessed."

So the TC 494 date is a deadline marker. If you see one on your transcript and you did not receive the notice, that is a serious issue to raise right away. You can also waive the restrictions in writing under IRC 6213(d), which is what happens when you sign an agreement form at the end of an agreed exam.

Mailing the notice also affects the assessment statute. IRC 6503(a) suspends the period of limitations on assessment and collection after the notice is mailed, for the time the IRS is prohibited from assessing, and for 60 days after.

Interest on the deficiency: TC 336

Document 6209 describes TC 336 as computer-generated interest assessed "upon posting of an Examination Adjustment (TC 300 with Doc. Code 47) and issuance of the adjustment notice." That is why an audit bill is often noticeably larger than the deficiency in the examination report. The interest has been running from the original due date. If the exam is later reduced, TC 337 abates the interest. More in Interest Codes on Your Transcript.

Penalties proposed in an exam post through their own codes, and the miscellaneous civil penalty code TC 240 is used for penalties that do not have a dedicated code, according to Document 6209. Read each penalty line separately.

Variations: TC 308 and TC 304

Document 6209 also lists TC 308, an additional tax assessment by Examination or Appeals with an interest computation date, used to input an examination deficiency where interest needs to start from a specific date. TC 304 adjusts a previously posted tentative carryback allowance. These are less common on individual accounts, but if you see them, they belong to the same family as TC 300 and should be read the same way.

What a TC 300 releases

An exam assessment does more than add tax. Document 6209 says TC 300 releases freezes for TC 640 advance payments, TC 720 refund repayments and TC 840 or TC 841 refund transactions. If you made an advance payment toward an expected deficiency, the TC 640 credit is frozen until the TC 300 posts. When it does, the payment applies.

A TC 300 blocked 790 to 799 or 900 to 999 generates a CP 55, per the 6209 entry.

Extensions of the assessment statute

Examinations often run up against the assessment statute, and the transcript records extensions. Document 6209 defines TC 560 as a waiver extension that "extends the Assessment Statute Expiration Date to the date input."

The statutory basis is IRC 6501(c)(4)(A), which allows assessment after the normal period if, before it expires, both the Secretary and the taxpayer have consented in writing. Those agreements can be extended by later written agreements. IRC 6501(c)(4)(B) requires the IRS to notify the taxpayer of the right to refuse to extend the period, or to limit the extension to particular issues or a particular period.

If you see a TC 560 on a year under exam, you or your representative signed something. Find out what it said and when it expires. If the IRS asks for another one, remember the statute gives you the right to refuse or to limit it.

Advance payments before the assessment

Some taxpayers pay a proposed deficiency before it is assessed to stop interest from growing. Document 6209 defines TC 640 as an "Advance Payment of Determined Deficiency or Underreporter Proposal." It says the module is frozen from refunding, offsetting out or credit elect when a TC 640 posts and no TC 300 is present, and the freeze is released when the TC 300 posts.

The same entry warns about one category. Overpayment interest is never allowed on TC 640 payments blocked 990 to 999, described as cash bonds, to the extent they exceed the audit deficiency they are applied to, even if the deficiency is later abated. If you are considering an advance payment, how it is designated matters. See Payment Codes on Your Transcript.

Questions to ask when you see a TC 300

• Is there a TC 420 or TC 424 before it? If not, how was the return examined?
• Is there a TC 494? If yes, what is its date, and was a Tax Court petition filed within the IRC 6213(a) period?
• Did you sign a waiver or agreement? If yes, the assessment may have been made on the basis of that consent under IRC 6213(d).
• Does the TC 300 amount match the examination report?
• Is there a TC 336? From what date does the interest run?
• Is there a TC 421? If not, the exam may still be open.

If any answer surprises you, stop and find out why before you pay, sign anything or ignore the bill. An exam assessment that went through the notice of deficiency process without a petition is generally final as to the amount, and the remaining options narrow quickly. An assessment that was made without that process, or that does not match what you agreed to, is a different conversation.

An examination assessment can sometimes be revisited after the fact through audit reconsideration or, if no prior opportunity existed, in a Collection Due Process hearing. IRC 6330(c)(2)(B) allows a challenge to the underlying liability in that hearing only if the person did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute it. The TC 494 line, or its absence, is evidence on that question. If you are dealing with an exam now, the firm's main site has an overview of IRS audits.