Requests for additional account reviews often delay the processing of tax returns. The IRS freezes taxpayers’ accounts during reviews and posts corresponding transaction codes to their tax account transcripts to inform them of their decision.
IRS Code 571 reverses a previously posted IRS Code 570 that puts tax return processing on hold and indicates that a tax refund will be approved if a taxpayer is eligible.
This TC concludes a weeks-long process during which the IRS carefully examines all taxpayers’ information and lifts the account freeze.
We’ll show you what IRS Code 571 could mean and give you advice on how to avoid ever seeing this TC on your tax account transcript.
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Common Causes of Processing Delays
The spike in processing delays we witnessed in recent years was caused mainly by staffing issues as the IRS struggled to find enough officers to issue all refunds on time.
These delays affected only a small percentage of taxpayers, as most tax filers received their refunds within three weeks after e-filing their tax returns.
Moreover, the IRS’ IMF (Individual Master File) automatically selects a specific number for additional review every year, which also causes refund postponement. Having your account chosen for a review by an IRS agent doesn’t always mean Code 570 will show up on your tax account transcript.
TC 570 and corresponding TC 571, which reverses the aforementioned code, are usually posted to tax account transcripts when the IRS determines that further action has to be taken before the refund is approved.
Misreporting wages or failing to supply sufficient information that confirms your identity are some of the reasons the IRS flags tax returns for additional reviews. You’ll likely see Code 570 on your tax account transcript if you claimed one of the following credits:
- American Opportunity Tax Credit
- Recovery Rebate
- Child Tax Credits
- Earned Income Tax Credits
The IRS will add Code 571 after the issue that required the additional review is resolved and the freeze is lifted from your account.
IRS Notices
Tax account transcripts don’t contain information about the reasons that triggered Code 570, so if the IRS resolves the matter without you, you’ll probably never know why the processing of your tax return was put on hold.
However, the IRS will notify you if further action is required from you and add Code 971 to your tax account transcript. You’ll have thirty days to respond to the notice sent digitally or via mail.
TCs 570 and 971 appear together on tax transcripts to signify that the IRS has detected an issue and that a notice with information regarding further steps was sent to a taxpayer.
It’s difficult to predict how long fixing the Code 570 problem and lifting the freeze from your account will take because settling different issues depends on their complexity.
As a result, you’ll have no way of knowing when the IRS might add Code 571 to your tax account transcript to inform you that the processing of your tax return was resumed.
In most cases, the IRS needs several weeks to complete the additional review, but sometimes you may have to wait more than a month to see Code 571 on your tax account transcript.
Obtaining a Tax Account Transcript
US taxpayers have been able to check the status of their tax returns online since 2014.
The IRS website features the Get Transcript tool that allows e-filers and all taxpayers with a registered account to acquire different transcript types they can use to apply for a mortgage or check how the processing of their tax returns is progressing.
According to Section 8A – Master File Codes, transaction codes are three-digit numbers identifying a transaction being processed. The same document also reveals that the IRS utilizes Reversal Codes to indicate that a transaction has been reversed.
Technically speaking, Code 571 is a Reversal Code because it releases Code 570 or Code 576 freeze status. These codes only appear on tax account transcripts. You cannot find them on a tax return or wage and income transcripts.
You can use the ID.me application to access the Get Transcript tool and request a tax account transcript. Optionally, you can file Form 4505-T if you want to receive your tax account transcript via mail.
Breaking Down IRS Code 571
Lifting the freeze from your account isn’t always a difficult task, but more often than not, you’ll have to invest considerable time and effort before you see IRS Code 571 on your tax account transcript.
The description displayed in a tax account transcript’s ‘Explanation of Transaction’ section is usually ‘Resolved Additional Account Action,’ suggesting that the freeze was lifted.
However, the description doesn’t provide extensive information about the review’s outcome or how it affects your tax refund.
The Date section reveals when the IRS posted this TC to a taxpayer’s tax account transcript. This section often shows a future date, meaning that the processing of a tax return is still on hold even though the freeze was lifted from an account.
Code 971, Code 571, and Code 572 can sometimes show the same dates. In this case, Code 571 indicates that the IRS has finished processing a tax return, and the refund will be issued within the next six weeks.
The Amount section in Code 571 line will be $0.00 even if the additional action affects your total tax refund amount. Hence, this TC won’t provide information regarding your overpayment credit.
Implications of IRS Code 571
The IRS utilizes Code 571 to reverse Code 570, so you’ll probably see this TC after several weeks of working with the IRS to provide all the information they need to continue processing your tax return.
Code 572 will appear on your tax account transcript if the review determines that assigning TC 570 or TC 576 to your account was the result of an input error.
TC 571 and TC 572 don’t indicate that the IRS will release your tax refund immediately, and you may have to wait for up to nine weeks to get your refund after either of these codes is posted to your account transcript.
The IRS might send you a notice to inform you that your account is no longer frozen, which is why Code 971 might appear next to TC 571 or TC 572.
Frequently Asked Questions
The length of the review process depends on the type of action required to resume processing, the amount of time a taxpayer needs to respond to a notice, and several other factors. That’s why the IRS may need a few weeks or over a month to add this TC to a tax transcript.
This transaction code reverses the account freeze created by Code 570. Consequently, you’re unlikely to see Code 571 if the account freeze was indicated by some other transaction code.
The IRS Code 572 informs a taxpayer that the addition of Code 570 was a mistake, while Code 571 indicates that the problem that caused the IRS to freeze an account was resolved.
You must contact the IRS if you think that the IRS froze your account by mistake and attempt to clear up the issue with the officer assigned to your case.
How to Avoid Seeing IRS Code 571 on a Tax Account Transcript?
The information you include on a tax return must be accurate, as even the slightest spelling error can cause a processing delay.
The best way to avoid dealing with IRS Code 570 and Code 571 is to ensure you’re eligible for the tax credits you want to claim and that your wages are correctly reported.
In addition, you should get in touch with the IRS as soon as you see Code 570 on your tax account transcript and determine if your account was frozen by mistake.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
