All tax returns go through an automatic or manual review after they’re filed and approved by the IRS. The IRS Code 290 might show up on your tax account transcript if the review reveals that your tax calculation is incorrect and that you owe more federal taxes than you initially thought.
Sometimes this code only indicates that the IRS’s review hasn’t revealed any discrepancies between the information you included on a tax return and the information available to the IRS.
Consequently, the correct interpretation of Code 290 is often contextual and depends on different factors, including other transaction codes on a tax account transcript.
We’ll show you what the IRS Code 290 could mean on a transcript and how to fix the problems related to this code.
Table of Contents
Accessing Tax Account Transcripts
The IRS uses transaction codes to identify different transactions that take place while a tax return is being processed. In addition, these codes inform taxpayers about each action the IRS takes when processing a tax return.
You must gain access to a tax account transcript to see which transaction codes the IRS assigned to your account. If you have an account on the IRS website, you can use the Get Transcript tool to request access to a tax account transcript.
Optionally, you can request a paper version of this document by phone or fax. Unfortunately, the IRS adds new transaction codes to transcripts while processing a tax return, so you may not see Code 290 on your tax account transcript shortly after filing a tax return.
The Implications of the IRS Code 290
This code won’t appear in your tax account transcript before the IRS completes the review of your tax return and determines if you owe additional taxes.
Hence its addition to the tax account transcript indicates that the processing of your tax return is no longer on hold. Remember that this code may appear in a transcript even if you don’t owe any additional taxes.
Code 290 would have $0,00 in the Amount column if the IRS determined that you don’t have a pending tax debt after the review.
The IRS Code 291 could appear together with Code 290 if the tax debt amount doesn’t exceed the tax refund amount the IRS owes to you. In this case, the IRS will use the funds available to settle a debt and approve the refund for the remaining amount.
Depending on the context, Code 290 might mean that the IRS has completed the review of your tax return and found no issues that require your attention, or it could indicate that the outcome of the review has revealed that you must pay additional taxes.
A Brief Code 290 Analysis
All transaction codes in a tax account return have the same sections. So, a Code 290 line will have the following elements:
- Code – The first column on a tax transcript always contains the code number and helps taxpayers find the code line they’re looking for.
- Explanation of transaction – The code’s description is always next to its number. Code 290 is always followed by the ‘Additional Tax Assessed’ message.
- Date – This column usually shows when the IRS has taken a specific action. The date next to Code 290 indicates when the IRS has assessed additional tax to your account.
- Amount – The value of different tax credits and liabilities is displayed in this column. The amount in Code 290 will either be $0,00 or a positive number if the IRS determines you owe additional taxes.
A quick look at the Code 290 line on a tax account transcript can help determine whether you misreported taxable income or have any outstanding tax debts.
The Most Common Causes of the IRS Code 290
The IRS has different motives for adding this transaction code to tax account transcripts, but more often than not, you’ll see Code 290 for the following reasons.
Automated Tax Return Adjustments
The Individual Master File analyzes all tax returns that enter the system. It compares the information included on a return with the information it acquires from From W2 and other forms employers and financial institutions send to the IRS.
The system will adjust your tax balance automatically if the information on your tax return doesn’t match the information your employer sent to the IRS. You’ll receive a notice informing you of the new return calculation.
The IRS Has Resumed Processing a Tax Return
Code 290 will appear in your tax account transcript after the IRS reviews your tax return.
The Amount section of the code line would show $0,00 if no tax return adjustments were made. This is because the IRS doesn’t inform taxpayers about the outcomes of the tax return review if no additional tax is assessed afterward.
The IRS Audit
You’ll likely see Code 290 on your tax account transcript if your tax return is being audited. However, this transaction code only indicates that the audit is completed and doesn’t contain any information regarding the steps you must take during this process.
The IRS will send you a letter informing you which step you must take during the audit.
Stimulus Check
Claiming stimulus payments as tax credits on a tax return could also be why the IRS added Code 290 to your tax transcript. However, the meaning of this tax credit is often misinterpreted, which results in tax return adjustments.
Fixing Code 290 Problems
You will receive a notice from the IRS if the additional tax is assessed to your account after the tax return review. Don’t take any steps before you receive instructions on how to proceed from the IRS.
You won’t be required to take any action if the Code 290 Amount is $0,00 or if the code is followed by Code 291 Reduced or Removed Prior Tax Assessed. In this case, the IRS will use the tax credit to settle the debt and issue a refund for the remaining amount.
However, you can file an appeal if the IRS assesses additional tax to your account and you disagree with this decision or think the assessment is inaccurate.
Approaching the IRS Alone
All taxpayers can schedule a meeting at the local IRS office if they want to dispute the assessed tax amount but bear in mind that finding a free slot for an appointment can be challenging. You’ll have to write an explanation of why you disagree with the decision and bring all documents that support your appeal to the meeting. Speaking to the IRS over the phone can be equally complicated due to the long waiting times.
Contacting the Taxpayer Advocate Service
The IRS has the Taxpayer Advocate Service (TAS) available to all taxpayers who cannot resolve tax issues independently. TAS can help you prepare for an audit or instruct you on increasing your chances of winning an appeal.
Frequently Asked Questions
You’ll receive a full tax refund if the Amount value in Code 290 line is $0,00. However, your refund might be reduced if your tax account transcript also contains Code 291 or the assessed tax amount exceeds the total tax credit amount.
This code will appear in your tax account transcript after the IRS completes the audit and assess the additional tax to your account.
Your tax return processing will usually be on hold due to an additional review before Code 290 appears on your tax account transcript. Hence, seeing the code means the IRS has resumed processing your tax return.
The IRS uses Code 420 or Code 424 to indicate that a tax account is being audited. Code 290 only appears in tax account transcripts after an audit is completed.
Talk to a CPA
Most taxpayers don’t notice when Code 290 appears on their tax account transcripts. This is understandable because the IRS doesn’t notify taxpayers that their tax returns are under review unless the additional tax is assessed to their accounts.
The Amount in the Code 290 line will be $0,00 in most cases, so you won’t have to pay additional taxes.
Call 866-8000-TAX or visit choicetaxrelief.com if you need a CPA to help you appeal the IRS decision to assess the additional tax to your account.
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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.
