Understanding IRS Processing Codes and What They Mean in 2020
The Internal Revenue Service (IRS) is responsible for collecting taxes and enforcing tax laws in the United States. One of the tools they use to process tax returns and enforce tax laws is a series of processing codes. These codes provide important information that helps the IRS identify potential issues or errors on tax returns. In this article, we will discuss the meaning of IRS processing codes and how they affect your tax return in 2020.
What Are IRS Processing Codes?
IRS processing codes are four-digit codes that appear on your tax return transcript. These codes show the status of your tax return and provide important information about how it is being processed. Each code has a specific meaning and is used for a specific purpose by the IRS.
How Do IRS Processing Codes Work?
Each IRS processing code represents a different stage in the processing of your tax return. Some codes indicate that your return has been received and is being reviewed, while others indicate that your return has been processed and a refund is on the way. Here are some examples of common codes and what they mean:
– Code 150: Your tax return has been received and is being reviewed.
– Code 806: Your refund has been reduced to pay a past-due obligation, such as unpaid taxes, child support, or student loans.
– Code 766: The IRS is reviewing your tax return because of suspected identity theft or fraud.
– Code 971: The IRS has sent you a notice requesting additional information or documentation to support your tax return.
Why Are IRS Processing Codes Important?
Understanding IRS processing codes is important because they can provide valuable information about the status of your tax return. If you receive a notice from the IRS with a specific processing code, it is important to understand what that code means and what steps you need to take to resolve any issues or disputes.
In addition, IRS processing codes can also affect the timing of your refund. For example, if your return has been flagged for review because of suspected fraud or identity theft, this can delay the processing of your refund.
Conclusion
In summary, IRS processing codes are an important tool used by the IRS to process tax returns and enforce tax laws. Understanding these codes can help you understand the status of your tax return and take necessary steps to resolve any issues or disputes. If you have received a notice from the IRS with a specific processing code, it is important to take the appropriate steps to resolve any issues and ensure that your tax return is processed accurately and efficiently.
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