570 IRS Code Explained
570 IRS Code Explained
When there is a 570 IRS code on your tax transcript, the IRS informs you there has been a delay in processing your tax return. 570 IRS code means that the processing will take longer than usual, it does not necessarily indicate that there has been an error or that they will be requesting adjustments.
TABLE OF CONTENTS
Key Takeaways:
- The IRS code 570 on your tax transcript means there is a hold on your account resulting in a delay in processing your tax return.
- TC 570 may be on your account because there was a discrepancy between wages reported by your employer and the figures listed on your tax return, to verify your identity, or to investigate the tax credits listed on your tax return.
- When there is an IRS code 570 on your account, contacting the IRS will not speed up the process of removing the hold. You must wait for the IRS to initiate correspondence.
- If the amount on code 570 line reads $0.00, the reason for the freeze of your tax return processing is not monetary related. If this line depicts a positive number, this indicates an updated tax liability.
Facts and Statistics:
- The IRS can take from 45 to 120 days to process your tax refund when IRS code 570 is listed on your account.
What Is IRS Code 570?
IRS code 570 on your tax transcript indicates that a hold on your account is preventing the IRS from processing your tax return. If you receive this tax code on your transcript, you must wait for the IRS to request additional information to help them finalize or release your tax refund. Until the hold has been processed, however, the IRS will not provide any other information about the delay to the taxpayer. In general, this delayed processing is usually due to a specific area of your return being flagged for further review.
Why TC 570 Is On Your Account
There are multiple reasons why you may observe IRS tax code 570 on your account:
The Discrepancy Between Reported Wages and Income
The IRS compares the wages reported by your employer to the information listed on your tax returns. If there is a mismatch between the amounts reported on your tax return, the IRS must take additional time to review your tax return and will send you a mismatch notice after the return processing is completed.
Sometimes the errors in tax returns are due to an employer making a mistake on their W-2 form. In this case, a W-2c (corrected w-2 form) must be requested by the employee. If the taxpayer has a problem with getting a corrected W-2, they can contact the IRS for assistance and they will issue a warning to their employer.
The Verification of Identity
Sometimes a tax return will be flagged to request additional information to verify someone’s identity. Due to increasing instances of identity theft and fraud, this verification aims to prioritize the security of taxpayers.
While there are specific factors that can trigger an account to be flagged for identity verification, the IRS will also request identity verification from people randomly. If your account is flagged for identity verification, the IRS will send you a letter requesting copies of your IDs.
Tax Credits
Tax credits can lower what a person owes in tax liability, so for this reason, listing tax credits on your tax return often results in the IRS further reviewing your tax return.
Earned Income Tax Credit (EITC) and American Opportunity Tax Credit
The Earned Income Tax Credit (EITC) and American Opportunity Tax Credit are examples of tax credits that can result in an increased processing time of your tax return.
Before the 2021 reviews of the EITC that allowed people to use their prior year’s income to claim this credit, people who claimed the EITC when filing their tax return often received their tax refunds within 3 weeks. However, since this change, the processing time has increased significantly, sometimes taking as long as several months.
Rebate Recovery Credit and Child Tax Credit
The COVID-19 pandemic altered the world forever, including the industry of taxes. During 2020 and 2021, the IRS issued stimulus payments and child tax credits to eligible taxpayers. People who were eligible for these credits but failed to receive them could claim them on their tax returns.
Due to the timing of these stimulus credits being issued early in the year, there were significant incidences of inaccuracies and errors in reporting the amount people received on their tax returns. Many TC 570 and correction letters were issued by the IRS due to these reporting issues.
What To Do When IRS Code 570 Is On Your Account
There is little taxpayers can do when there is an IRS code 570 on their account, so unfortunately, the only thing to do is to wait for the IRS to finish processing their tax returns. When you see TC 571 appear on your account, this status indicates that the IRS has resumed the process of reviewing your tax return.
If the investigation reveals a revision that must be made to the tax return, the IRS will contact the filer to inform them. If a revision must be made and the IRS decides to send the filer a correction letter, TC 971 will appear on their tax transcript as an indication.
Will contacting the IRS speed up the tax return review time?
No, calling or visiting your local IRS office will not resolve the hold faster nor will they be able to provide additional information about the status of your return.
The Amount on Code 570 Line Meaning
The number listed on the code 570 line indicates a dollar amount. Due to the fact that TC 570 does not directly change your tax return, if this line reads $0.00, it means the hold causing the processing of your tax return to be delayed is non-monetary related. If this line reads with a positive number, this indicates an updated tax liability.
When Will Code 570 Be Resolved?
The IRS will inform the taxpayer that code 570 has been resolved and the hold will be removed by issuing a letter outlining the changes to their return or by issuing their tax refund as expected. The delays involved with code 570 usually can be resolved within a few weeks but can take up to a few months depending on how busy the IRS is at the time.
How To Check The Status Of Your Tax Refund
There are several methods of checking the status of your tax refund when you observe tax code 570 on your account.
- Monitor the status of your hold through your account on IRS.gov.
- Utilize the Taxpayer Advocate Service by contacting the Taxpayer Advocate’s office.
- Track your refund at the Where’s My Refund site, but only after the return has been approved.
What To Do If There Is An Error In Your Tax Assessment
Once your tax return has been reviewed, you will receive a notice of assessment. If you notice anything inaccurate in their assessment, you have 30 days to resolve the issue. The best methods for resolving discrepancies with your tax return include visiting your local IRS agent, contacting the Taxpayer Advocate Service, or consulting with a tax professional.
If you have questions about the tax codes listed on your transcription letter or want advice about issues with your taxes, consult with the tax professionals at Ideal Tax.
