What Does a 971 Notice Issued With 0.00 Mean for Your Tax Refund?

Seeing a “971 notice issued” with a balance of $0.00 on your tax transcript can be confusing, especially if you’re waiting for a refund. The IRS uses transaction codes to track updates and actions on taxpayer accounts, but these codes aren’t always self-explanatory.

Understanding what this notice means is important because it could indicate a delay or simply an administrative update. While it doesn’t necessarily mean there’s an issue with your return, knowing how it relates to your refund status can help set expectations.

Code 971 on a Tax Account

The IRS assigns transaction codes to track actions on a taxpayer’s account, and Code 971 signifies that a notice or letter has been issued. This code does not automatically indicate a problem but serves as a record that the IRS has sent correspondence. The nature of the notice varies—it could be an informational update, a request for additional documentation, or notification of a review.

A common reason for Code 971 appearing is when the IRS sends a letter about adjustments, identity verification, or processing delays. If a return is selected for review due to discrepancies in reported income or credits, the IRS may issue a notice explaining the situation. Similarly, if a taxpayer has claimed refundable credits such as the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), the IRS may request supporting documents before processing the refund.

Not all 971 notices require action. Some are purely informational, such as updates on processing timelines or confirmation of received documents. However, if the notice requests a response, failing to act could lead to further delays. The specific details of the notice can be found by checking the corresponding letter number, which is usually listed alongside the code on the transcript.

Reasons for a 0.00 Notice

A notice with a balance of $0.00 means the IRS has issued correspondence regarding your tax return, but no additional tax is due. This often happens when the IRS acknowledges receipt of documents related to a prior request, such as identity verification or supporting paperwork for a deduction or credit. The 0.00 amount simply indicates that the notice itself does not carry any financial impact.

Another reason for this type of notice is when the IRS completes an internal review of a return without making changes. If a return was flagged for verification but ultimately required no modifications, the IRS may issue a notice to inform the taxpayer that their filing remains unchanged. This can provide reassurance that no further action is needed, though it may also indicate that processing is still ongoing.

In some cases, a 0.00 notice reflects an update to the taxpayer’s account, such as the closure of a previous inquiry or the resolution of a pending issue. If a taxpayer had submitted a request for penalty abatement or an appeal regarding a prior adjustment, the IRS may issue a notice confirming that the matter has been reviewed and no additional tax is owed.

Relation to Refund

A “971 notice issued” entry on a tax transcript often raises concerns about its impact on a refund. While this notice itself does not change the refund status, it can indicate an administrative action that may affect processing time. If the IRS has issued a notice related to verification procedures, the refund may be placed on hold until the requested information is reviewed. This is common when a return includes refundable credits subject to additional scrutiny, such as the Recovery Rebate Credit, which requires verification of prior stimulus payments before disbursement.

Delays tied to a 971 notice can also stem from procedural reviews that impact refund timing but do not alter the amount owed. If a return is flagged under the IRS’s pre-refund examination process, the agency may issue a notice informing the filer that additional time is needed to complete the review. These examinations are common when income discrepancies arise from third-party reporting, such as W-2s or 1099 forms, which must align with IRS records before a refund is approved. In such cases, the transcript may show multiple transaction codes alongside 971, including Code 570 (Additional Account Action Pending), which further indicates a temporary hold.

If a refund has already been processed, a 971 notice may simply serve as documentation of prior IRS correspondence that does not require further taxpayer action. This can occur when the IRS sends a confirmation of adjustments related to refundable tax credits or when it issues a notice about offsets applied to the refund. If a taxpayer has outstanding federal debts, such as unpaid student loans or overdue child support, the Treasury Offset Program may reduce the refund amount, and a separate notice is typically issued to explain the adjustment.

Steps to Validate the Notice

To confirm the details of a 971 notice, access your tax transcript through the IRS’s online portal or request a mailed copy. The transcript provides a chronological record of actions taken on your tax account, and the notice will typically be accompanied by a corresponding letter number. Cross-referencing this number with IRS resources, such as the agency’s official notice database or mailed correspondence, can clarify the reason for issuance. If no letter has been received, contacting the IRS directly may be necessary to obtain specifics.

Reviewing the notice date in relation to other entries on the transcript can also provide insight. If the 971 code appears shortly after a submission, such as an amended return or an appeal request, it may indicate that the IRS has acknowledged receipt. If the notice follows an adjustment entry, such as transaction codes 766 (credit applied) or 290 (additional tax assessed), it could serve as confirmation of a prior determination.

When Further Information Is Needed

If the details of a 971 notice remain unclear after reviewing the tax transcript and any related correspondence, further steps may be necessary. Some notices require a response, while others are purely informational, making it important to distinguish between the two. If the transcript includes additional transaction codes, such as 570 (Additional Account Action Pending) or 420 (Examination of Tax Return), the notice may be tied to an ongoing review that could affect refund processing.

Contacting the IRS directly is often the most effective way to obtain specific details about a notice, especially if no letter has been received. The agency’s toll-free number for individual tax inquiries (800-829-1040) can provide clarification, though wait times may vary depending on the time of year. When calling, having a copy of the tax transcript and any prior IRS correspondence on hand can streamline the process. If the notice relates to identity verification, the IRS may require the taxpayer to complete Form 14039 (Identity Theft Affidavit) or visit an in-person verification center. For notices tied to return adjustments, requesting a detailed explanation of any changes can help determine whether further action is required.