If you see IRS code 570 on your tax transcript, this means that the IRS has frozen your federal income tax refund, pending further internal action. This transcript code (TC) means that there may be an anomaly or discrepancy in the information the IRS has on file for you and that further investigation must be done before any refunds can be released. TC 570 frequently relates to additional inquiries from the IRS surrounding tax credits, wage reporting, and identity verification.
What to Expect With Transcript Code 570
The IRS may request additional information from you due to irregularities in what was reported. In some cases, it may want additional information to verify your identity before releasing your tax refund.
It applies certain testing criteria to every return to minimize identity theft. If the testing results present evidence of potential fraud, then the account is flagged and refund processing is suspended. The IRS will then mail out one of the letters listed below, advising the taxpayer of the cause of the suspension.
- Letter 4464C: Questionable Refund Hold
- Letter 5071C: Potential Identity Theft During Original Processing with Online Option
- Letter 4883C: Potential Identity Theft
- Notice CP01B: Request for Additional Information to Process Your Return
What to Do When Code 570 Is on Your Transcript
When TC 570 is on your transcript, look out for correspondence from the IRS to come in the mail. You do not need to call the IRS, as the IRS agent will most likely only provide the same information that you see on your transcript and not much more.
The IRS notice you receive will:
- Indicate the reason for the delay;
- Note if additional information is required from you; or
- Advise you that the IRS needs more time to provide you with the details regarding the delay
Reasons for Transcript Code 570
Identity Theft
When there are discrepancies in documents received by the IRS that cast doubt on the filer’s identity, a taxpayer’s refund may be delayed. On occasion, the IRS arbitrarily selects tax filings for identity verification. The resulting delays may be represented on an IRS transcript, denoted by TC 570.
Tax Return Under Review
The IRS Automated Questionable Credit (AQC) program is a system of checks the IRS uses to help limit erroneous or inappropriately claimed refunds. It may be the catalyst for TC 570 if your IRS file is currently under review.
Refunds may be held until the examination is complete. If an examination is being conducted for a prior year, IRS code 570 may be present on that year’s transcript until the review is complete.
Tax Credit Discrepancy
Certain tax credits—such as the earned income tax credit and employee retention credit—have historically been frequent targets for fraudsters. Even tax credits that have a lower risk of fraud may still have inconsistent or incomplete information that the IRS may question.
Before issuing a refund, the IRS will want those questions answered. In a case where the IRS has outstanding questions about the legitimacy of a tax credit claim, code 570 may appear on the taxpayer’s transcript.
Wage Reporting Discrepancy
Discrepancies in wage reporting could result from input errors or from a corrected W-2 filing reported by your employer that was not reflected on your tax return. If that information does not match what was reported to the IRS by your employer, the IRS may have further inquiries, and you may see code 570 on your IRS transcript.
Refund Release After Transcript Code 570
Once the IRS has formalized the issue for which the refund has been frozen, it will send you a notice. This IRS contact should take place within 30 days of generating code 570 on your transcript.
Once the notice has been issued, your transcript may subsequently show TC 971, with a description of “notice issued.” This is important to know because if you don’t receive anything in the mail, you’ll at least know there is outstanding correspondence that you need to locate.
After the additional account action is completed, your transcript will be updated to show resolution. New codes will be added to record the current status.
Transcript Codes Used When Your Refund is Released
When the IRS has completed processing of your return, TC 571 may be used, showing that the additional account action was resolved. Code 571 may be followed by TC 846, indicating that your tax refund has been issued.
Once the IRS has issued your tax refund, it will then be subject to any processing timelines set up by your banking institution before you see the funds in your account.
Timing of Refund Release
The timing of the additional review needed to reverse TC 570 is dependent on how overloaded the IRS is at the time. In some cases, the IRS resolved and released refunds within a few weeks, while it took several months for others.
How to Check the Status of a Refund
The IRS’s Where’s My Refund tool is the most efficient way to monitor your refund status. You’ll need to have the following information handy to access refund information:
- Social Security number
- Filing status
- Year of the tax refund expected
- Exact dollar amount of the expected tax refund
Frequently Asked Questions (FAQs)
No, IRS TC 570 does not automatically mean you are being audited. However, during the course of an audit, you may see code 570 on your transcript if a refund is being withheld, pending further inquiry.
Code 570 means that the IRS has frozen your refund and plans to take additional action on or by the date provided.
IRS identity verification is generally triggered by an inconsistency or conflict in the information provided. The IRS may require identity verification in these cases to ensure you get the refund and not a fraudulent party.
Bottom Line
IRS code 570 may be seen when there is a hold on the processing of your tax refund due to information that the IRS has flagged for further review. Subsequent correspondence will be sent to you, noting the specifics of the hold, and if any measures need to be performed by you.
