What Does Code 922 on an IRS Transcript Mean?

Understanding IRS transcripts can be crucial for taxpayers, especially when encountering unfamiliar codes like 922. These transcripts provide a detailed account of a taxpayer’s history with the IRS, including transactions or adjustments made to their tax accounts.

The presence of Code 922 on your transcript signifies a review or examination of your tax return, often related to adjustments or corrections. This code can appear for various reasons, each with distinct implications.

Potential Reasons for the Notation

Code 922 signals that the IRS is examining your return due to discrepancies or errors. For instance, if your reported income doesn’t align with the W-2 forms submitted by your employer, the IRS may initiate a review. Similarly, unreported income, incorrect deductions, or filing mistakes can trigger this code. The IRS employs sophisticated algorithms to identify returns that deviate from expected norms. Claims for credits or deductions for which you are ineligible may also prompt scrutiny.

This code may also indicate an audit, though not all reviews escalate to that level. Audits vary in scope, ranging from correspondence to in-person examinations, depending on the complexity of the issues identified. Be prepared to provide documentation and explanations to support your filings if requested.

Effect on Refund or Tax Liability

Code 922 can affect your refund or tax liability based on the outcome of the IRS’s review. If discrepancies are uncovered, the IRS may adjust your return, potentially increasing your tax liability or reducing your refund. For example, unreported income could lead to additional taxes, interest, and penalties. Errors related to overclaimed deductions or credits, such as the Earned Income Tax Credit (EITC), may require repayment with added interest and possibly a negligence penalty, typically 20% of the underpayment.

On the other hand, the review might work in your favor. If the IRS identifies overlooked deductions or credits, your refund could increase, or your tax liability might decrease. Accurate records and proper documentation are essential for ensuring the best possible outcome.

Document or Information Requests

When the IRS identifies issues requiring further examination, it typically requests additional documentation or information. These requests are often issued through formal notices, such as a CP2000 notice, which details the discrepancies and specifies the documents needed for verification. The IRS may ask for items like bank statements, receipts, or verification letters. Responding promptly and thoroughly is critical, as it can significantly influence the review’s outcome.

The standard response timeline is 30 days, though this can vary. Failure to comply could result in additional penalties or a default assessment. Extensions may be granted at the IRS’s discretion if more time is needed. Submitting organized, relevant, and legible documents can help streamline the process.

Following Up on Transcript Updates

Regularly reviewing your IRS transcript ensures you stay informed about any changes or new notations. This proactive approach allows you to address issues quickly, minimizing potential disruptions. If you notice a pattern of reviews or adjustments over consecutive years, it may indicate a need to refine your tax reporting practices. Consulting a tax advisor can help ensure ongoing compliance and identify areas for improvement.

Resolving Concerns with the IRS

When Code 922 appears on your transcript, resolving the matter requires careful communication and documentation. Review any correspondence from the IRS to understand the specific reasons for the review or adjustment. These documents usually include instructions for responding, deadlines, and contact information for inquiries.

For further clarification, contacting the IRS directly can help. The IRS provides a dedicated phone line for transcript-related questions, and representatives can explain the nature of the review or adjustment. Preparing your questions and relevant documents in advance can make these interactions more productive. For complex or financially significant issues, consulting a tax professional, such as a CPA or enrolled agent, can be beneficial. These professionals are well-versed in tax regulations and can act as intermediaries, potentially expediting resolution.