The Internal Revenue Service reviews millions of tax returns each year. The agency uses transaction codes on individual taxpayer records to streamline its processes.
When you file your taxes, the information creates a register that the IRS maintains yearly. If you have a refund, the transaction register shows that the money is owed and when the agency eventually pays it.
If you owe money, the transaction register shows the balance due. It will also track when you make payments. Some professionals pay estimated quarterly taxes, which also appear on the tax record.
The IRS uses hundreds of different transaction codes to show what happens with individual records and returns. When you see this information and know what it means, you can resolve issues faster than waiting for the official letters that come in the mail.
What Does 571 Mean on IRS Transcript?
The IRS reports that code 571 on a transcript means that it is a reversal of tax code 570 or 576. This status appears when a previous action on a taxpayer’s record is reversed for a specific reason. It indicates that a credit on hold or a pending liability has changed its status, and the issue is now resolved.
Most taxpayers see code 571 appear with a future date. This information indicates that the freeze on a tax return will be undone at that time.
Code 570 from the IRS indicates an additional liability pending or a credit hold. With the 571 designation, the government is telling you that the issues are resolved. You can expect progress on your return or whatever problem you face with your record.
Some taxpayers might receive a letter in the mail requesting additional information regarding their 570 or 571 codes. This document should have a phone number to contact the IRS to determine what is needed if the information isn’t outlined as expected.
The IRS does not contact individual taxpayers by phone, text, or email. You always receive a letter in the mail, meaning any other contact should be considered suspicious.
The 571 on an IRS transcript can also be a reversal of code 576, which is a refund held for review. It holds an unallowable tax to the extent of the credit balance in suspense. You might also see code 577 in this circumstance, but you won’t see it combined with 571. It depends on the issues found in the documentation and the eventual conclusion reached by those responsible for initiating the request.
How Long Does It Take to Process Tax Returns?
For most taxpayers, the IRS requires up to 21 days to process returns, including a refund. It can be finished in as little as ten days, especially when there aren’t itemized deductions or small business pass-through income and schedules to report.
This timing is passed onto the e-file methodologies. You can file your tax return on paper, which can take much longer to turn around administratively. The documentation must be manually entered into the agency’s software before processing.
The IRS and most tax professionals recommend electronic filing whenever possible.
Most people can start filing their tax returns around the end of January each year. Early filers who want a refund can get their money in mid-February when there aren’t any transaction codes assigned to the account.
If you expect a refund with a child tax credit or the EITC (Earned Income Tax Credit), these refunds are often delayed by 30 days or more as the IRS confirms eligibility.
In 2021 and 2022, COVID complications extended deadlines even further. That leniency is expected to disappear in 2023 and future tax seasons.
When you file electronically, the IRS notifies you of the day and time when the agency accepted the return. It is usually 24 to 72 hours after clicking the “Submit” or “File” button.
Some taxpayers need to correct their returns. The IRS often fixes these, but that process delays the refund even more.
Those issues are why it is often beneficial for taxpayers to hire a tax professional to help with their return, especially if complicated income streams and complex holdings are part of the financial profile.
How Can I Get Code 571 on My Tax Return?
When you see code 570 on your tax register, it indicates that a review has been initiated by someone at the IRS. This issue might be due to an error on the return, a credit or tax issue that is unallowable in your circumstances, or another issue that results in a hold.
It takes several weeks for a transaction code 570 to resolve. This status covers a wide range of potential issues. Until you receive notification from the IRS with a letter in the mail, you won’t know the exact reason for the delay.
Some taxpayers can call the IRS to request an update to their code 571 status. Still, the information is usually only expanded upon once an automatic or internal resolution occurs.
Once a resolution is available, you’ll receive a notice in the mail with an opportunity to appeal the adjustments. After code 571 is entered, your refund processing or payment requirements resume as before.
The IRS sometimes needs additional information to resolve specific codes. You’ll receive a formal notice showing the discrepancy and possible refund reduction, along with the next steps to resolve the issue.
Why Is My IRS Tax Refund Delayed?
Your IRS transcript might receive code 570 for several reasons. The most common issues that the agency sees involve failure to sign the return or math errors made when calculating the amount due.
Some returns are delayed, or refunds are halted because the Social Security number is not included on the document. If you have dependents, this information must also match.
For those who paper file, code 570 can also appear when forgetting the forms for specific credits or deductions. People with small business income from a sole proprietorship, partnership, or pass-through LLC often experience this issue because they forgot to include one of their corresponding schedules.
In 2023, the IRS announced that anyone filing a paper return could be waiting six months or more to receive a refund. With the e-file systems, 90% of refunds are returned in 21 days or less.
The fastest way to see the current status of your IRS tax return is to use the Where’s My Refund tool. It is updated daily, so checking it more often than that will not provide you with any updated information.
The IRS Where’s My Refund tool is available for all taxpayers under the following conditions.
- After 24 hours when processing an e-filed tax return for the current year.
- Within four days after e-filing a previous year’s tax return.
- At least six months after a paper return, and potentially even longer.
With the Where’s My Refund tool, you receive updates on your return progress in three states. You’ll see that your return was received, the refund was approved, and the money was sent.
If there are delays in that process, the transaction codes will appear on your personal IRS transcript.
Direct Deposit Reduces the Time It Takes for a Refund
The IRS considers direct deposit to be the fastest and safest method of receiving a refund. You can choose this option with your filing software, type in the account and routing numbers, and finish your paperwork with a click.
If you use a tax preparer to manage your returns, let them know you want the direct deposit option for your refund. It’s even available for paper filers, although you’ll need to double-check that the numbers are correct.
Some taxpayers with prepaid debit cards might have the option to get their refund applied to their card. If this request isn’t possible, code 570 might appear on the transaction record until an alternative payment option is given to the IRS.
Should I Be Worried About Code 571 on My IRS Transcript?
Code 571 on an IRS transcript indicates a hold is necessary because of an issue with processing a return. Most people have minor problems that get corrected within a few days, but there could be a need for additional information or a signature. Respond quickly to any correspondence to ensure a refund gets swiftly processed.
When I was much younger than I am today, I cashed a savings bond a little early because I didn’t have enough to pay the rent. It seemed like a simple solution.
Then the IRS placed code 570 on my transcript. A few weeks went by without any updates, which frustrated me to no end. What on earth was happening?
A letter finally appeared in the mail, though it was more of a postcard. It informed me that the bank had reported me cashing the savings bond and that I had to pay taxes on the interest. Since I didn’t report that on my taxes, they assessed me a few dollars as a penalty.
I had to sign off that I agreed on the resolution. About three weeks later, my refund arrived. Code 571 is nothing to worry about on a transcript. It means your return is no longer held.
