You may be surprised to see some unfamiliar information on your tax return. So you may be wondering what code 971 is on the IRS transcript; the action taken on your tax return determines a refund.
The IRS has imposed a new format on code 971 to take care of the people who comply with the tax return. The idea is to protect citizens against identity thieves who use tax transcripts to declare or steal personal information falsely.
A transcript has different interpretations. It all depends on the code printed on it, which indicates different situations or things. As long as you have more information about them, you will feel more at ease just by glancing at the return. Code 971 works in favour of taxpayers.
What does code 971 mean?
On the tax transcript, code 971 means that the return will be subject to an examination, which usually takes 60 days. Although the return is kept under review, no further documentation is needed from the taxpayer. It is a normal procedure, showing nothing unusual about the return.
Code 971 on the ISR transcript indicates that a person is eligible for the unemployment tax refund and notifies the refund amount. The amount will be paid by check, direct deposit or mail. This payment type is common and should be made with care.
To find out if you are liable for the unemployment tax refund, you can do the verification on the ISR website by logging in with your data. Evaluate your transcript account and confirm if code 971 appears on the transcript.
Code 971 is also observed when reporting some changes. It is done about different reasons for a change. Officially it is known as Miscellaneous Transactions, meaning that additional revisions are made, or information is required.
Possible reasons for code 971
There are different reasons why code 971 appears on the IRS transcript. It is the way an issue is reported and should not concern you. Any changes or delays will be notified. Some of the reasons for receiving code 971 on the transcript are:
- The corrected return of any tax
- Bankruptcy notice
- Balance transferred to split liability account
- Collection due date
- Duplicate tax returns processed
- Duplicate notice sent to spouse
- Marital status for income tax return purposes
- Issue due process of the collection with a Notice of Intent to Levy.
Remember that a 971 code is not the same as a 971 publication. The latter is issued when the spouse can be exempted from what is owed. It includes penalties and taxes in connection with a joint tax return. Also included in this relief are innocent spouse relief, equitable relief and separation of liability relief.
How to obtain an ISR transcript
To find out if code 971 appears on your tax transcript, you can log on to the web from a computer or mobile device. To do this, you need to create an account to access your IRS information. Do it in the following way:
- When on the home page, click on Open an account
- Enter your full name
- Your email address
- Your date of birth
- Social Security Number
- Individual Tax ID Number
- Marital status (for tax filing purposes)
- Current residence address
Upon completing the information, which the IRS will verify, click Submit, and you will be able to view the status of your refund. To get your tax transcript and find out if it contains code 971, follow these steps:
- On the web, go to the IRS transcript toll page and select Get my transcript online.
- Enter the non-social taxpayer security number, email, marital status, and account numbers in your name and cell phone number.
- Click Continue. In a few minutes, you will receive your tax transcript by email.
With an account, you can view all types of tax transcripts. You can also download and print it. Remember that all information must be correct.
How to know if you receive code 971 on the transcript
When you are on the IRS website and use the Where’s My Return field for the first time, you will see three areas where you must enter information about your marital status, refund amount and Social Security number. When you complete this step, click Submit.
If you have received the code 971, it will appear in the tax transcript status. It means that you are about to receive your unemployment tax refund. In addition to the amount, the transcript will also show the exact date you will receive the payment.
Remember that a transcript summarizes taxpayers’ critical tax information on their federal tax return. It provides an authoritative description of the information that a lender may want to evaluate.
This document previously contained more extensive information about a person’s identity, including confidential data such as Social Security numbers. The IRS has modified the format to provide greater individual protection to prevent taxpayers from becoming victims of identity theft.
For years I have studied American finance regulations. All the information in this blog is sourced from official or contrasted sources from reliable sites.
Salesforce Certified SALES & SERVICE Cloud Consultant in February 2020, Salesforce Certified Administrator (ADM-201), and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.