A tax transcript is a document that shows a summary of your tax return information as processed by the IRS. It includes important information such as your tax return status, income, deductions, and any tax payments you have made. One code that may appear on a tax transcript is 971, which relates to a notice that the IRS has sent regarding a tax balance due. In this answer, we will explore what the code 971 means on a tax transcript.
The code 971 indicates that the IRS has sent a notice of tax due to the taxpayer. This means that the taxpayer owes the IRS money for unpaid taxes, penalties, or interest. The notice of tax due is typically sent by mail to the taxpayer’s last known address, and includes information about the amount of tax owed, the due date, and instructions on how to pay.
When the taxpayer receives the notice of tax due, they should review it carefully to ensure that the information is accurate. If there are errors or discrepancies, they should contact the IRS immediately to correct the issue. The taxpayer can also request an installment agreement or an offer in compromise to pay the tax debt over time or settle the debt for less than the full amount owed.
If the taxpayer does not respond to the notice of tax due, the IRS may take collection action, which could include levying bank accounts or wages, or seizing assets. It is important for taxpayers to respond promptly and take appropriate action to avoid additional penalties and interest.
In addition to the code 971, there are other codes that may appear on a tax transcript related to tax balances due. For example, code 570 indicates that the IRS has frozen the taxpayer’s account due to a tax balance due, while code 846 indicates that the taxpayer’s refund has been applied to a tax balance due.
If a taxpayer has questions or concerns about a tax balance due or notices received from the IRS, they can contact the IRS directly or seek the assistance of a tax professional. It is important to address any tax issues promptly to avoid further penalties, interest, or collection action by the IRS.
In summary, the code 971 on a tax transcript indicates that the taxpayer has received a notice of tax due from the IRS. This means that the taxpayer owes the IRS money for unpaid taxes, penalties, or interest. It is important for taxpayers to review the notice carefully, respond promptly, and take appropriate action to avoid additional penalties and interest. If a taxpayer has questions or concerns, they can contact the IRS directly or seek the assistance of a tax professional.