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In 2025, the IRS suspended almost 3.4 million tax returns for errors and potential identity theft, according to the Taxpayer Advocate Service.
The codes on your IRS transcript explain how the IRS processes your tax return at every stage. Once you understand what these codes mean, you can act more quickly and ensure you can receive your refund without delays or cancellation.
This guide explains the meaning of common IRS transcript codes and what actions you should take. You will learn about code 507, 806 tax code, code 846, and code 971 on the IRS transcript.
What is a Tax Code on the IRS Transcript?
IRS tax codes are used by the IRS to record and track specific actions taken on your tax account. These codes are a shorthand for the IRS to document everything, including basic filing actions, adjustments, and refunds.
These codes are added through an electronic system called the Master File. As your return moves through processing, the system adds transaction codes to show what has been done at each step. Understanding what these numbers mean can be challenging for any taxpayer. A professional tax preparation service can guide you through these, so you can understand the exact status of your tax return and when you can receive a refund.
You can view these codes under a dedicated "Transactions" section on your IRS transcript.
An IRS transcript is the official report that summarizes your tax return information and your account activity with the IRS. You can request it for free from the IRS official website. Moreover, there are five different types of transcriptions based on what you need. The tax account transcript is where you will see the transaction codes.
That said, there are thousands of these codes, and you can find details about all of them in Section 8A of IRS Document 6209. However, many of these codes are only for IRS internal tracking and don't mean anything to you as a taxpayer. Let’s review the codes that are most relevant to you in the following sections.
What is IRS Code 570?
IRS Code 570 stands for "Additional Account Action Pending." In simple words, this means that the IRS has put a temporary hold on your tax refund while they conduct an additional review. So, your refund isn't frozen. It’s only paused so the IRS can verify something on your return.
Why It Appears
There are several reasons why code 570 appears on your transcript. The IRS may need to verify your identity or check for discrepancies between what you reported and what your employer or financial institution submitted. Some common causes include:
- Mismatched wage information
- Tax credit claims that need verification.
- Missing income statements
What to Do?
In most cases, you don't need to do anything about the code 570. The IRS will complete its review within two to four weeks. In the meantime, you can monitor your transcript every week for any updates. If the IRS needs information from you, you will see Code 971 on your transcript.
What is Code 971 on IRS Transcript?
Code 971 on your transcript means that the IRS has sent you a notice that explains how you need to respond or what action it has taken. It doesn't necessarily mean there's a problem with your refund. In fact, the code can appear for a number of reasons.
Why Code 971 Appears
Code 971 on the IRS transcript acts as a confirmation that the IRS has conducted an action on your tax return. This could be to request identity verification before processing your return or making adjustments to your return after review.
Here’s What to Do
The only thing you need to do is wait for the IRS letter to arrive in the mail. This can take anywhere between 5 and 10 business days. Once received, read it carefully and respond quickly if the IRS needs something from you. Then, monitor your transcript for any new codes that will explain the next steps the IRS has taken.
What does IRS 806 Tax Code Mean?
IRS Code 806 shows the total federal taxes that were taken out of your pay during the tax year. This includes federal income tax withholding and excess FICA taxes withheld by your employer or other payers. The IRS officially labels this as “Credit for Withheld Taxes and Excess FICA.”
On your IRS transcript, the number next to Code 806 is the total amount your employer already sent to the IRS for you. Therefore, this amount should match Line 25d on your Form 1040. Also, this amount appears as a negative number, which means it is a credit in your favor, and not the amount you owe.
Why Code 806 Appears
806 tax code appears as a confirmation that the IRS has recorded the federal income tax and FICA taxes withheld from your pay, based on information from your W-2 or 1099 forms. And usually, this code appears together with Code 150, which means your tax return was filed and officially accepted by the IRS.
What You Need to Do
After receiving code 806, make sure the associated amount matches the total withholding shown on your W-2 or 1099 forms.
If the amounts do not match:
- Contact your employer to correct any W-2 errors.
- If the issue is not resolved, call the IRS for help.
If the Code 806 amount doesn't match your W-2 withholdings, you can consult professional tax resolution services to help identify the error and file corrections. A certified tax professional can prevent complications with the IRS and save you time and effort.
What is the IRS Code 846?
IRS Code 846 stands for "Refund Issued." This is the good news all taxpayers want to hear. It means that the IRS has approved your refund and sent it to you. The date next to the code shows when the IRS issued your refund. It does not necessarily mean when you'll receive it.
Why It Appears
Code 846 appears after the IRS has processed your taxes and determined you're owed a refund. This happens when your total credits, including tax withholdings, estimated tax payments, and refundable tax credits, exceed the total tax you owe to the IRS.
What You Can Do
After viewing the code 846, make sure to verify that the amount matches your expectations. Sometimes, you will see adjustment codes following code 846. These will explain any discrepancies, such as your refund being reduced, cancelled, or delayed for review. So, make sure to monitor your transcript for any updates until you receive your refund.
Final Words
That’s all about the code 507, 806 tax code, code 846, and code 971 on the IRS transcript. These codes can help you track how the IRS processes your tax return and decide whether you’ll receive a refund and how much it will be. If you find IRS tax codes confusing or difficult to understand, a professional can help explain them so you know exactly what they mean.
At MyKarme, we help you navigate your tax problems more easily. Whether you’re struggling to understand IRS notices or need to resolve penalties, we are here to fix your tax issues with personalized help from experienced tax professionals. Contact us now to get started!