Folks who have been waiting for a long time on their tax return processing and refund status may see transaction code 290 and 291 on their (free) IRS tax transcript once processing is moved forward by the IRS.
Per the screenshot below, transaction code 290 will generally be accompanied by the line, “Additional tax assessed,” with a cycle code, date and amount.
Seeing the words “additional tax assessed” on their IRS tax transcript may create a sense of panic in may tax filers. Especially for those with amended returns or for those that have seen extended delays in the processing of their tax return.
But it’s important not to panic and understand what these codes mean (they are system generated). In particular the amount and subsequent codes listed after code 290 may tell you a lot more about what’s happened with the IRS processing and whether you have an additional liability or even an additional refund.
Do I owe taxes or am I getting a refund if see Code 290?
Code 290 in a way is a good thing to see on your transcript, because if means your tax return has been processed/reviewed by the IRS and they have made a determination, so it is no longer on hold.
While the TC 290 is for the IRS system message “Additional Tax Assessed,” it does not automatically mean you owe taxes.
In fact the code often occurs even if there is no tax assessed, which is shown by a $0 in the amount line. You can see this in the screenshot above.
Generally a $0 assessment will mean any holds have been lifted from your account and no additional action is required from the tax filer around this item.
The IRS does not normally send notices no changes are assessed and will proceed to issue a refund or any adjustments.
On the flip side, if the amount is greater than $0, it means the IRS has determined that you owe additional taxes and they will sent you a notice/letter in the mail explaining the tax assessed and options to pay or appeal the determination. This will show as code 971 on your tax transcript.
If you agree with the IRS assessment and additional charges, you should pay them by the due date to avoid additional penalties and interest.
What does Code 291 (reduced tax liability) mean after TC 290?
If you are due to a refund or prior tax adjustment after the IRS review (code 290), you will see a code 291 – Reduced or Removed prior tax assessed message, with the amount of reduced tax (refund) shown as a negative number. You may then see code 846 for when the refund is issued.
If you did have an existing IRS tax liability, code 291 can also reduce the balance due, partially reducing the taxes you owe the IRS.
In some cases, if your refund payment was delayed due to IRS processing backlogs, you will actually get an interest payment from the IRS. The amount will be shown against transcript transaction code 776 on your tax transcript.