Understanding IRS Processing Codes and Their Meaning in 2020: A Comprehensive Guide
Have you ever received a letter from the IRS with a code that you couldn’t understand? Or have you ever wondered what these processing codes mean? If yes, then this comprehensive guide is for you.
The IRS processing codes are alpha-numeric codes assigned to every tax return, payment, and notice processed by the Internal Revenue Service (IRS). These codes help identify the transaction type, status, and nature of the action required on the taxpayer’s account. Knowing what these codes mean can help you understand why you received a notice, what changes the IRS made to your tax return, and how to resolve any issues with your account.
In this guide, we will walk you through the most common IRS processing codes you might see in 2020 and what they mean.
Processing Codes and Their Meanings:
1. 420 – The taxpayer owes money to the IRS:
If you receive a tax bill with processing code 420, it means you owe money to the IRS, and a balance due notice has been sent.
2. 424 – Payment posted:
You’ll see this processing code on your account transcript when the IRS has received and posted your payment.
3. 806 – Multiple notices sent or refund delayed:
This processing code indicates that you may have received more than one notice regarding your taxes, and the IRS is still processing your refund.
4. 766 – Credit to your account:
The IRS uses this processing code when they credit your account for any payments or taxes that you paid.
5. 570 – Additional account action pending:
If you see this processing code on your account transcript, it means the IRS is still processing your account and may need more time before they take any further action.
6. 971 – Notice sent:
This processing code indicates that the IRS has sent you a notice regarding your account, request, or decision.
7. 972 – Decision letter sent:
If you receive this processing code, it means the IRS has made a decision regarding your case and has sent you a letter notifying you of the decision.
Conclusion:
Understanding IRS processing codes can be a challenge, especially when you don’t know what they mean. However, by knowing what these codes imply, you can better navigate your tax account and avoid any unnecessary penalties or fines. This comprehensive guide delves into the common processing codes you may encounter and their meanings, making it easier for you to interpret any federal notices or letters you receive. It’s always wise to keep in mind that timely payment, careful record-keeping, and tax compliance can help you avoid issues with the IRS in the first place.
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