You submitted your tax return on time. After waiting for your refund for three weeks without getting anything, you decide to look at your transcript.
That’s when you see different codes assigned to your profile. Two common ones are 570 and 971. What do they mean, and what can you do if these codes appear?
What Is Code 570 and 971 on My IRS Tax Transcript?
IRS tax transcript code 570 appears when an additional review is necessary to process a taxpayer’s annual return, including sending a refund. It is on hold until the concerns are addressed. Code 971 appears when the IRS sends notice on an issue regarding the tax return documentation.
After the Internal Revenue Service accepts your return, either paper or e-file, you’ll see an update to your individual tax transcript.
The easiest way to describe the transcript is that it looks and feels like a budget line for individual taxpayers. It tracks what you owe and what the government owes you, creating a zero balance at the end of the year.
If the amount on your transcript is negative, the government owes you money. You’ll receive a refund for the amount, bringing the transcript to zero. When it shows a positive balance, that means you owe the IRS money.
You’ll need to pay that amount by the tax deadline each year to avoid interest, fees, and other penalties.
As you review the IRS transcript, you’ll see that several codes get assigned to different amounts. Each one provides specific information about what to expect from the government. When you know what they mean, you can anticipate what is needed so that the return processing and refund-sending work receives expedition.
What Does Code 570 Mean on My IRS Tax Transcript?
When code 570 appears on your tax transcript, additional documentation reviews are required before a refund can be processed. Once you see this designation, everything is on hold until the required assessment is complete.
This code is a generic indication that a hold is necessary because something is missing or incorrect with a tax return.
Although almost any error or omission can trigger this transcript code, here are the five top reasons that the IRS says they see when using it.
- The tax credit you reported for items like the EITC (Earned Income Tax Credit) or CTC (Child Tax Credit) don’t match what the government has in its records for you.
- You receive a stimulus payment, from the federal or state government, and the amount doesn’t match what is in the IRS records.
- You’ve reported wages from your W-2 form, but those figures don’t match what your employer submitted with their tax filing.
- You, a spouse, or a dependent has identification verification steps to complete because the information doesn’t match, or another return was already processed.
- Part of your tax return includes an Injured Spouse Allocation because you’ve filed Form 8379.
What Can I Do If I See Code 570 on My Tax Transcript?
When you see code 570, the IRS initiates a hold on your tax return to ensure its accuracy. Since this issue is an internal process, there isn’t anything you can or should do to try to expedite this process.
There might be times when the IRS needs more information from you to complete their review. They’ll contact you by mail via the US Postal Service if a follow-up is necessary.
Most taxpayers find that this tax transcript code requires no action on their part. The IRS resolves the issue they discovered, then continues processing the return as expected. If you receive a refund, that amount will be issued.
Some code 570 resolutions involve an increase or a decrease in an expected refund. You’ll receive a letter explaining why changes were made compared to the return you filed and any steps to follow for an appeal.
If an additional amount gets issued, you might receive a check with that letter, even if you chose a direct deposit option for your refund.
Most code 570 issues are resolved within a few days or weeks. In complicated cases where an extensive investigation is necessary, it could be several months before you receive an anticipated refund.
If it has been more than a year without resolution, consider a conversation with a taxpayer advocacy service or an experienced tax professional.
What Does Code 971 Mean on My IRS Tax Transcript?
When you see Code 971 on your IRS tax transcript, it usually means a letter was sent to you that says there are changes to your return. The reasons for this update could be numerous, but it is generally due to a math error or information correction.
This transaction code represents miscellaneous transactions. When you get the notice from the IRS, it will indicate the reasons why changes were made to the return.
If an amount is listed next to the 971 IRS transaction code, this information typically references an adjustment return amount. You can look at the other logs above this figure to see if automatic changes were made to the return, or if the agency requires you to make changes or submit information to finalize the process.
Most taxpayers don’t need to act when they see code 971 on their transcript. This information is used to notify of the issue found, but it shouldn’t be a cause for concern. You’ll see the reason for any delays in the record or when you receive a notification in the mail of the update.
Here are some of the most common reasons why you might see code 971 appear on your tax transcript.
- You submitted an amended tax return from this year or a previous one.
- There was a balance transferred to a split liability account.
- A duplicate tax return was processed, either by mistake by the individual or because of an identity theft issue.
- A duplicate notice was sent to a spouse.
- Collections are due, or a bankruptcy notification was received.
It is important to remember that transcript code 971 differed from IRS Publication 971. The latter refers to when a spouse is relieved of what is due, including penalties and taxes, when a joint return is filed.
That relief involves separation of liability, equitable, and innocent spouse relief.
What Can I Do If I See Code 971 on My Tax Transcript?
Reviews involving transcript code 971 typically require between 45 to 60 days to resolve. The actual timeframe depends on how complicated the return is with credits, schedules, and income resources.
Some reviews may take 120 days or more to complete once the transcript receives code 971.
If you receive a notice in the mail that requires additional information, send the requested items to the IRS as quickly as possible to limit unnecessary delays.
Once the code appears, you can expect the IRS to adjust your return. You might see another code later when a letter notifies you of the intended resolution, especially if your refund is lower than expected.
Why Are There Dates and Monetary Amounts Next to the Codes?
The 570 and 971 tax transcript codes sometimes have a date and a monetary amount next to them. This information means a specific amount requires adjustment on the submitted return and when the IRS implemented the change.
Most taxpayers will see a $0 indicator on the same line as the tax code. This information means the reason the code was submitted won’t impact your refund or the amount due from the proposed return.
When the codes affect your refund, you’ll see a positive or negative amount in the transcript.
Your tax transcript can include dates from the past several years while reviewing the history of your returns. Please remember to check the entries carefully to ensure you’re looking at the most recent information.
How Will I Know When Things Are Resolved?
Once the tax review is finished, you should see code 571 or 572 on your transcript. This information indicates that the issue requiring a hold has been resolved, and the return is back to processing.
It is possible to see multiple 971 codes within the same year or incident. This information indicates that another notice is being mailed to you regarding the situation.
When you see the exact date next to the 571 or 572 code and the 971 indicators, you can expect the refund to arrive in your bank account with direct deposit in about three to six weeks. The IRS requires additional processing to finalize your return if you see different dates next to the codes.
There will be more of a delay if the latter occurs.
Your goal is to see code 846 appear on your tax transcript. That means your refund was authorized for release and is paid. Your money will arrive shortly, within 72 business hours for those with direct deposit. It can take 14 to 21 days to receive a check.
What If I Don’t Agree with Codes 570 and 971?
Taxpayers can file an appeal if they disagree with the findings from tax transcript code 570. It helps to have an experienced CPA or taxpayer advocate service available to lend support in this situation, especially if the government’s conclusion reduces a refund by several thousand dollars.
I encountered my first 570 and 971 codes during the COVID year. Not only did I have small business paperwork to manage, but I also needed to submit proof of work loss due to the kids needing to be in school.
My records indicated I could claim about 40 days, which generated a significant credit. The tax software wouldn’t allow me to submit that paperwork, so everything had to be done by hand that year.
I was expecting a refund of nearly $5,500. The IRS put on the 570 code about three weeks after the paper return was mailed. It took almost six months for it to update from there. When I saw code 971, I was happy, and even more satisfied with code 846.
Then the check came in the mail. My refund was about $4,000 less than expected.
I’m still in the process of appealing that decision. There isn’t a risk of losing more because the IRS adjusted my return automatically, and my CPA says she’ll take a percentage of what I get from this process. That means nothing out of pocket, either.
Most people don’t have anything to worry about when they see these transcript codes. It is usually a communication method that delivers information about your return’s status. If the decision doesn’t go your way, that’s when you’ll want to speak with a tax professional about your next steps.
