When transcript code (TC) 766 appears on an IRS transcript, it generally means a refundable credit has been applied to a taxpayer’s account. Refundable credits can generate refunds even when no tax is owed on the return.
Sometimes, the transcript description for code 766 will say “tax relief credit”—and since tax relief is government assistance generally aimed at a targeted demographic, most credits would qualify as tax relief credits. Common credits that fall under TC 766 include Earned Income Tax Credit, Child Tax Credit, Lifetime Learning Credit, and American Opportunity Credit.
IRS Code 766 Reported with Code 846
Code 766 is most meaningful when reviewed with the other tax codes on the transcript. For example, the presence of code 766 in conjunction with code 846 means that the IRS has allowed a refundable credit (TC 766) and has issued the refund (TC 846).
The credit from TC 766 may have been generated from a variety of sources, claimed on the following forms:
- 1040
- 1041
- 1120
- 1120-S
- 990 PF
How to Check the Status of a Refund
The quickest way to check your tax refund status is to use the IRS’s Where’s My Refund tool. However, if sufficient information is unavailable, you should use the IRS’s Get Your Tax Record tool
There are five types of transcripts that you can order from the IRS. Note that the Tax Account transcript will allow you to see IRS adjustments to the numbers you reported on your return, where the IRS adjustments are accompanied by a code. Learn how to read an IRS transcript.
IRS Code 766 Reported with Code 898
IRS TC 898 indicates a garnishment and could be the result of one of two scenarios:
- A refundable credit (code 766) was posted to your account but then immediately garnished (code 898).
- Your prior tax refund was garnished (code 898), but then the garnishment was reversed. The reversal of a garnishment will appear as a refundable tax credit (code 766).
Tax refunds can be garnished for a variety of reasons, including:
- Delinquent child support
- Federal agency non-tax debts (certain defaulted loans, benefit overpayments, and outstanding fines and penalties)
- State income tax debt
- Repayment of benefits received fraudulently or in error
If a refund is offset from a jointly filed return
IRS Code 766 Reported with Code 767
TC 767 reverses code 766. Code 767 may be described on the transcript as a “reduction or removal in tax relief credit.” The removal could be due to a posting error or pursuant to the outcome of an IRS audit.
If the IRS posted a refundable fuel tax credit to your account with TC 766 but subsequently determined that you were ineligible, you may see TC 766 reversed on your transcript by TC 767. TC 841 may also be present, identifying a returned payment.
Frequently Asked Questions (FAQs)
The IRS uses tax transcript codes to represent IRS updates to a taxpayer’s account.
Yes. You can call 800-908-9946 to request that a copy be sent via postal mail.
Yes. If a taxpayer and the authorized party sign Form 2848, the authorized party may request a transcript on your behalf.
A negative balance means that the IRS has reduced the amount of tax owed.
Bottom Line
IRS code 766 may show up on an IRS transcript if credit has been applied to the taxpayer’s account. For a thorough understanding of IRS actions, tax codes should be looked at in conjunction with the other information presented on the transcript.
