What IRS Transcript Code 971 Means: Identity Verification, IRS Issues, and Resolution

A tax transcript is an official summary of a taxpayer’s account with the Internal Revenue Service, providing a record of filings, payments, notices, and any adjustments made. Many taxpayers review their transcripts to confirm the status of a tax return, check for refund updates, and monitor whether additional information or corrections have been posted. Understanding the codes and entries on a transcript is essential for avoiding unnecessary stress and ensuring that taxes are processed accurately.

Among the most common entries is IRS Transcript Code 971, which often carries the description “Notice Issued.” When this code appears, it signals that the IRS has taken an action involving the taxpayer’s account, such as issuing a notice, requesting verification, or reviewing discrepancies. While the dollar amount may show as zero, the code itself has important implications for tax liability, refund delays, or further requests from the agency. This is why every taxpayer must read notices and respond promptly and carefully.

The IRS provides secure tools such as IRS Get Transcript Online, which allow taxpayers to file electronically, review records, and confirm the exact date when multiple actions are processed. By using these resources and understanding what each IRS code means, individuals can protect their accounts, verify their status, and address issues before penalties, interest, or additional taxes.

What Is IRS Transcript Code 971? (IRS Code Explained)

When reviewing a tax transcript, one of the most frequently noted transaction codes is 971. This entry is commonly labeled “Notice Issued” and is part of a system of codes the Internal Revenue Service uses to manage and track actions in a taxpayer’s account. Every IRS code is tied to a specific action or administrative step, and understanding what each code represents is essential when determining why the IRS may have contacted you or adjusted your filing.

Code 971 is officially defined in the IRS documentation as IRS Publication 6209, classifying it as a “Miscellaneous Transaction Code.” This category covers a range of actions that may not directly alter the balance of taxes owed but still affect how a tax return or account is processed. In practice, when a taxpayer sees Code 971 on a transcript, it almost always means that the IRS has issued, or will issue, a notice explaining an issue that needs attention.

There are several reasons why Code 971 might appear on a tax transcript. In many cases, the IRS sends out notices to request identity verification, to ask for additional information, or to explain corrections made during processing. The code may also appear when the agency acknowledges filing an amended return or when adjustments involve prior records. While the amount column usually shows $0.00, this does not mean the notice is unimportant. Even without a balance change, the notice can relate to a claim, a request for supporting documentation, or an explanation of discrepancies that involve wages, income, or deductions.

Taxpayers should view Code 971 as a signal to check their mail and online account for any correspondence. The IRS often provides details by letter, and the transcript entry is essentially a record of that issuance. It is also important to note whether the code is shown on the same date as other entries, such as Code 570 or Code 846, since these may indicate that the notice is tied to a refund hold or adjustment. Reviewing these details carefully ensures taxpayers can respond on time, verify their information, and avoid delays in processing or receiving a tax refund.

Why Does IRS Transcript Code 971 Appear on a Tax Transcript? (IRS Issues)

When a taxpayer reviews a tax transcript and sees Code 971, the natural question is why the entry is there in the first place. This IRS code usually represents that a notice has been issued. Still, the underlying reason can vary depending on the taxpayer’s account, prior filings, or additional information the IRS may need. Recognizing the most common causes helps taxpayers understand the situation and take the proper steps to resolve it.

• Identity verification requirements: The IRS frequently uses Code 971 to place a return under review for identity confirmation. This process protects security and helps prevent fraudulent claims for refunds. If the agency believes more proof is necessary, it may request documents such as proof of address, prior year returns, or identification forms. The agency may delay processing the return and refund until the taxpayer verifies their identity.
  
  
• Additional documentation needed: Another reason Code 971 appears is a request for supporting paperwork. The IRS may want confirmation of wages, income, or deductions. In some cases, credits claimed on the tax return raise questions that require additional records. Employers, financial institutions, or third parties may have reported information that does not align with what the taxpayer submitted, leading to a discrepancy. A notice will be sent asking for the timely submission of the required documentation.
  
  
• Return under review:  Code 971 may also appear when a return is under general review. This does not always mean there is a problem, but rather that the IRS is taking additional time to verify the filing. A return under review might involve complex claims or specific forms that require more analysis. If the entry is listed with the same date as other codes, such as 570, it can signal that the return is being held until the review is completed.
  
  
• Math error or discrepancy resolution: In many cases, Code 971 is triggered when the IRS corrects a math error or identifies a difference between the taxpayer’s return and the information on file. This might involve wages reported by employers, income reported by banks, or credits that exceed legal limits. The IRS will issue a notice explaining the correction and, if necessary, will adjust the balance due or apply additional tax.
  
  
• Amended return filed: Taxpayers who file an amended return may also see Code 971 appear. This is a way for the IRS to document the receipt and processing of the new form. The notice associated with this code may explain how the amendment is being reviewed and its impact on the taxpayer’s account. In some cases, the amended form may involve new tax liability calculations or a change in the refund amount.

In every situation, the appearance of Code 971 reflects that the IRS has taken action that requires attention. Reviewing the notice promptly, understanding the reason for the issuance, and responding on time allows the taxpayer to resolve the matter and avoid unnecessary penalties, interest, or extended delays.

Reading Code 971 on Your Tax Transcript (Tax Return & Same Date Context)

When taxpayers review a tax transcript, knowing how to read each entry is essential. Code 971 is not just a random notation; it indicates that the IRS has issued or will issue a notice about the taxpayer’s account. Reading this code correctly ensures that you understand the timing of the notice, what the agency is addressing, and how it may affect your tax return, refund, or tax liability. The transcript entry also helps you track when the IRS resolves issues or posts additional information that involves your filing.

• Locate the IRS code: Taxpayers can find Code 971 in the transaction code column of the transcript. It will be listed along with other codes, such as 150 for a tax return filed, 570 for additional account action pending, or 846 for a refund issued. Each code represents a specific IRS action, and Code 971 signals the issuance of a notice.
  
  
• Check the date: Every entry includes a date that shows when the action was posted. If the date is in the future, the notice has been scheduled but has not yet been mailed. If it matches the same date as another code, such as 570, the refund is held until the matter is resolved.
  
  
• Review the amount: Many taxpayers see $0.00 listed next to Code 971. This does not mean the notice is unimportant. Instead, it reflects that no direct change has yet been made to the balance. The notice may still explain corrections, an amended return, or a claim that needs supporting documentation.
  
  
• Compare with other codes: It is essential to review whether Code 971 appears alongside other entries. A combination of codes on the same date can indicate that your refund has been delayed or that the IRS requires further action.

Reading Code 971 correctly lets you confirm whether your tax return is being processed normally or whether the IRS has raised issues requiring your response. By monitoring your transcript and online account, you can act quickly when notices are posted, respond with the requested documents, and avoid delays in receiving your tax refund.

Tax Return and Tax Liability: How Code 971 Affects You

Impact on Tax Return

When Code 971 appears on a tax transcript, one of the first concerns for taxpayers is how it affects their tax return. The presence of this code means the IRS has either issued a notice or is preparing to do so, which can influence how quickly a return is processed. For some taxpayers, the notice may require additional information, such as documents verifying income, deductions, or credits. Others may find that the IRS has flagged discrepancies that need correction before a refund can be released. If Code 971 appears on the same date as Code 570, it could cause a delay in refund processing while the IRS conducts its review.

The IRS may also post Code 971 when acknowledging the filing of an amended return. In these cases, the notice will confirm that the new form has been received and explain how it is being processed. Taxpayers should be prepared to wait as the IRS reviews the amended filing, verifies the figures, and updates the taxpayer’s account. In every situation, it is crucial to read the notice carefully, follow the instructions, and submit any required documents promptly. Doing so ensures the return continues to be processed and reduces the likelihood of further delays.

Impact on Tax Liability

The influence of Code 971 extends beyond the processing of a tax return. In some cases, the notice is connected to tax liability, which is the total balance a taxpayer owes after credits, payments, and adjustments are considered. If the IRS identifies errors that increase the amount owed, the notice will explain the correction and may show an additional tax balance. This is particularly common when wages reported by employers or income from other sources do not match the figures provided on the return.

When Code 971 appears in this context, taxpayers may also see adjustments for penalties or interest. For example, if a filing error delays the correct calculation of taxes, the IRS may add interest charges from the original due date until the correction is made. A notice linked to Code 971 outlines these changes and explains how the balance has been recalculated. Taxpayers should check their online account and records to verify the accuracy of the adjustment. The taxpayers may need to respond with supporting documentation or file electronically if they disagree with correcting the discrepancy.

Understanding the dual impact of Code 971 on tax return processing and tax liability allows taxpayers to manage their accounts more effectively. Whether the issue involves a refund delay, an amended filing, or an additional balance, paying attention to the notice ensures that corrective action can be taken promptly. By responding quickly, submitting documents, and verifying information, taxpayers can help the IRS resolve the matter and avoid further penalties, interest, or complications.

What to Do If You See Code 971 (Identity Verification and Resolution)

When Code 971 appears on a tax transcript, it signals that the IRS has issued or will issue a notice that requires attention. Ignoring this entry can lead to further delays, additional tax liability, or penalties. Taking the correct steps ensures the IRS resolves the matter quickly and that the taxpayer’s account remains in excellent standing.

Read the Notice

• Every taxpayer should carefully read the notice connected to Code 971 once it arrives by mail.
  
  
• The notice will explain the reason for the issuance, whether it involves identity verification, additional documentation, or a correction to the tax return.
  
  
• Please carefully review the listed address, deadlines, and required forms.
  
  
• Notices often include instructions on how to submit documents online or by post.
  
  
• Failure to respond promptly can delay refunds or create further account issues.
  
  

Verify Your Identity

• Identity verification plays a crucial role in many Code 971 cases.
  
  
• Taxpayers may be asked to confirm their identity using the IRS online account or a dedicated verification website.
  
  
• Verification may involve submitting prior returns, proof of income, or security documents to prove account ownership.
  
  
• Sometimes, taxpayers must call the IRS directly or attend an in-person appointment to complete verification.
  
  
• Until this step is completed, the return will not be processed, and any refund will remain on hold.

Respond to Requests

• Taxpayers should gather the requested documents if the notice asks for additional information.
  
  
• This may include employer income records, deduction claims, or credit documentation.
  
  
• Submit documents exactly as the instructions state, whether by mail, online upload, or electronic form.
  
  
• Ensure all documents are accurate and complete before submission to prevent further corrections.
  
  
• A timely response allows the IRS to continue processing and to resolve the issue.

When the IRS Resolves Issues

• After the taxpayer responds, the IRS reviews the documents and updates the taxpayer’s account.
  
  
• The IRS fixes the problem by posting the adjustments and starting the return processing again if everything is correct.
  
  
• This resolution may issue a refund in some instances or confirm an additional balance due in others.
  
  
• Taxpayers should monitor their online account and transcript for confirmation that the issue has been processed.
  
  
• Taxpayers may seek assistance from the Taxpayer Advocate Service to resolve the delay if they don't see any progress after several weeks.

By following these steps—reading the notice, verifying identity, responding with the required documents, and monitoring account updates—taxpayers can ensure the IRS resolves Code 971 without unnecessary complications. Prompt action protects the taxpayer’s account, ensures compliance, and reduces the risk of ongoing penalties, interest, or refund delays.

Using Your IRS Online Account to Monitor Transcript Updates

The secure IRS online account is one of the most effective ways to stay updated on IRS transcript activity. This tool allows taxpayers to monitor their filings, track payments, and view any notices posted to their account. By checking the online system regularly, taxpayers can confirm whether Code 971 has been issued, review the date of issuance, and identify whether the exact date is linked to other codes such as 570 or 846. Monitoring these updates helps taxpayers respond quickly to notices and avoid refund delays.

• Taxpayers can log in to IRS Get Transcript Online to view their complete tax transcript.
  
  
• The system provides access to prior tax return records, notices, and other account information.
  
  
• Refund status updates are displayed, making it easy to confirm whether the IRS has processed or delayed a payment.
  
  
• Taxpayers can also check balances, credits, and any additional tax adjustments that may have been posted.
  
  
• This service adds security by requiring identity verification to confirm account ownership before granting access.

Using the IRS online account allows taxpayers to gain control over their records and identify discrepancies quickly. For example, if Code 971 appears with a refund hold, the online transcript will confirm the exact date and the reason involved. This allows taxpayers to prepare documents, respond on time, and ensure that the IRS resolves the matter without prolonged delays. Maintaining awareness through online monitoring protects the taxpayer’s account and reduces the likelihood of missed notifications, unaddressed corrections, or interest and penalties that may otherwise arise.

Professional Help: IRS Transcript Analysis and Resolution

Seeking professional help is often the best approach when Code 971 appears on a tax transcript and the notice is difficult to understand. Tax professionals have the knowledge to interpret IRS codes, review prior filings, and explain how a notice affects the taxpayer’s account. Their guidance ensures that every required document is submitted correctly and on time, which reduces the chance of further delay.

Expert guidance: Professionals can identify why Code 971 was posted and explain the differences between related codes, such as 570 or 846. They can also clarify whether the notice involves verifying identity, submitting an amended return, or correcting a tax return. This detailed explanation allows taxpayers to respond confidently and avoid unnecessary confusion.

Filing corrections: When a notice involves discrepancies, a professional can prepare or review an amended return and ensure it is filed electronically if required. This step helps prevent errors, ensures that the IRS processes the return promptly, and reduces the risk of additional tax being assessed.

Avoiding penalties and interest: Professionals can review the balance, payments, and credits in the taxpayer’s account to confirm whether penalties or interest have been applied. If issues remain unresolved, they can provide documentation that supports the taxpayer’s claim and request corrections.

IRS communication: Tax experts manage communication with the IRS, handle letters or notices by mail, and confirm when the IRS resolves an issue. They also assist taxpayers who have waited for extended periods without updates by contacting the IRS or the Taxpayer Advocate Service.

Relying on expert assistance allows taxpayers to gain clarity, safeguard their records, and expedite the resolution of Code 971 while minimizing financial risks.

Frequently Asked Questions

What does IRS Transcript Code 971 mean on my tax transcript?

IRS Transcript Code 971 appears on a tax transcript to indicate that a notice has been issued regarding the taxpayer’s account. The code signals that the IRS has taken an action, such as requesting additional information, reviewing a return, or verifying identity. While the dollar amount may show as zero, the notice is significant and may affect the processing of a tax return or a tax refund.

Does Code 971 always cause a tax refund delay?

Code 971 does not always delay a refund, but it frequently appears when the IRS is conducting a review. Refunds are often held until the taxpayer provides the additional information requested or completes identity verification. If the code appears on the same date as Code 570, it usually indicates that the refund will be delayed until the IRS resolves the issue and processes the necessary corrections.

What is the difference between Code 570 and Code 971 on the same date?

Code 570 generally signals that an additional action is pending on the taxpayer’s account, while Code 971 indicates that a notice has been issued. When both codes appear on the same date, the IRS holds the refund and sends a letter explaining the reason. Understanding these codes' differences helps taxpayers know whether to expect a delay or request documentation.

How do I complete identity verification after receiving a notice?

When a notice tied to Code 971 requires identity verification, taxpayers must follow the instructions in the letter. This may involve verifying through the IRS online account, providing documents by mail, or calling a designated number. In some cases, an in-person appointment is scheduled. Prompt completion of identity verification ensures the IRS resolves the matter, processes the tax return, and issues the refund without further delays or additional tax liability.

Can Code 971 affect my tax liability or result in additional taxes?

Yes, Code 971 can sometimes be connected to adjustments in tax liability. For example, if the IRS identifies discrepancies between wages reported by employers and amounts claimed on the tax return, it may issue a notice explaining the correction. This could result in an additional tax balance, penalties, or interest. The taxpayer should review the notice carefully and respond if they disagree. Prompt action ensures the account remains accurate and up-to-date.

How do I update my address if I never received the IRS letter?

If a taxpayer sees Code 971 on their tax transcript but has not received a letter, it may be due to an outdated address on file. The IRS requires that taxpayers keep records updated to ensure notices are delivered. Address changes can be submitted electronically, by mail, or with Form 8822. Updating the address promptly ensures that important notices and corrections are received, allowing taxpayers to respond swiftly.

When does the IRS resolve issues tied to Code 971?

The timeline for resolution depends on the reason behind Code 971. If the code pertains to identity verification, the IRS may resolve the issue once the taxpayer provides documents and verifies their identity. The process may take longer if it involves an amended return or additional tax. Taxpayers should monitor their online account and transcript for updates. Should the resolution delay, taxpayers may need to contact the IRS or the Taxpayer Advocate Service.