Understanding IRS Transaction Codes

What Transaction Codes Are

Every action the IRS takes on a tax account is recorded as a transaction code — a three-digit number that appears in the first column of an IRS Account Transcript. The IRS uses these codes internally to track assessments, payments, adjustments, notices, collection actions, and resolution events.

The complete list of transaction codes runs to hundreds of entries, published in IRS Document 6209. In practice, tax resolution work involves a much smaller subset. The codes below cover what practitioners encounter on the majority of active collection cases.

Each transaction posts with three pieces of information: the code, the date the IRS processed it, and the dollar amount (positive adds to balance, negative reduces it). Reading the sequence of codes chronologically tells you the full history of how the IRS has handled the account.

TaxRes CRM's IRS workflow tools are built around these codes — tracking which ones have posted, flagging the ones that require action, and surfacing statute dates before they become problems.

Assessment and Filing Codes

These codes establish the original tax liability and any subsequent adjustments. The dates on these codes set the clock on everything that follows.

TC	Meaning	What to Do
150	Return filed and tax assessed. This is the original assessment — the formal recording of the liability. The date next to TC 150 is the CSED start date.	Record this date first. Calculate base CSED (TC 150 date + 10 years) before doing anything else.
154	Substitute for Return (SFR) filed by IRS. The IRS prepared a return on the taxpayer's behalf using available third-party data. SFR assessments are typically overstated — no deductions, no credits.	File the actual return to replace the SFR. A superseding return replaces the SFR assessment and almost always reduces the liability.
290	Additional tax assessed. Follows an audit, amended return, or IRS math correction. A new CSED may apply to the TC 290 amount if assessed separately from TC 150.	Identify whether the TC 290 creates a new CSED or extends the existing one. Check for a TC 300 (audit assessment) as the source.
300	Additional tax assessed via examination. The result of a completed audit. The CSED for this amount runs from the TC 300 date.	Verify the audit is actually closed. TC 420 (exam indicator) should be followed by TC 421 (exam closed) before resolving collection.
420	Examination indicator — audit is open on this account.	Do not submit OIC or finalize installment agreement until the audit closes. The liability is not final while TC 420 is active.
421	Examination closed — no change, or results posted via TC 300.	Collection can now proceed. If TC 300 followed, use that date for the adjusted CSED calculation.
608	Assessment Statute Expiration Date (ASED) — the IRS can no longer assess additional tax for this period.	If TC 608 is posted, the audit window is permanently closed for that year. No further assessments possible.
610	Remittance with return — payment made with the original filing.	Confirm the payment was applied correctly. Discrepancies between TC 610 and the balance may indicate a misapplied payment.
670	Subsequent payment posted.	Verify payments are being applied to the correct tax period and in the correct order (tax first, then penalty, then interest).

Penalty and Interest Codes

Penalties compound quickly. Knowing which penalty applies, when it was assessed, and whether it's abatable changes the math on every resolution calculation.

TC	Penalty Type	Abatable?
160	Failure to File (FTF) penalty — 5% of unpaid tax per month, up to 25%.	Yes — First-Time Abatement (FTA) or reasonable cause. FTA requires 3 years of clean compliance history. Most effective penalty abatement tool available.
166	Failure to Pay (FTP) penalty — 0.5% of unpaid tax per month, up to 25%. Drops to 0.25% while an installment agreement is active.	Yes — FTA or reasonable cause. FTP abatement is often overlooked because the per-month rate looks small. On a $100,000 balance over 4 years, it adds $12,000+.
186	Failure to Pay penalty — same as TC 166 in most contexts, posted in certain automated collection systems.	Yes — same abatement paths as TC 166.
196	Interest charged on unpaid tax and penalties. Accrues daily at the federal short-term rate plus 3%.	No — interest cannot be abated except in cases of IRS error (erroneous written advice, unreasonable IRS delay). This is why resolving cases quickly matters.
240	Miscellaneous penalty — covers penalties not separately coded, including accuracy-related penalties from audits.	Depends on type. Accuracy-related penalties abatable via reasonable cause. Review the source document that generated TC 240.
276	Failure to Deposit (FTD) penalty — applies to 941 payroll tax deposits. 2–15% depending on how late the deposit was.	Yes — FTA or reasonable cause. FTD penalties are separate from TFRP liability. Abating the FTD does not eliminate personal TFRP exposure.
320	Civil fraud penalty — 75% of underpayment attributable to fraud. Rare but significant.	No — civil fraud penalties are not abatable via standard paths. Requires demonstrating the fraud finding itself was incorrect.

Collection Action Codes

These codes tell you where the IRS is in the enforcement sequence. Some require action within days. A client who calls after receiving a letter with any of these on their account transcript needs to be moved to the front of the queue.

TC	Meaning	Action Required
582	Notice of Federal Tax Lien (NFTL) filed at county recorder. The lien is now public record — visible to lenders, title companies, and credit bureaus.	Determine resolution path. Lien discharge (Form 14135), subordination (Form 14134), or withdrawal (Form 12277) depending on the client's situation.
583	Lien released. IRS legal claim removed after liability paid. Public record still exists until withdrawal.	If client needs clear title or credit repair, file Form 12277 for withdrawal. Release alone does not remove the public record.
668	Bank levy issued. The IRS has served a levy on the client's financial institution. A 21-day hold begins — the bank cannot release funds for 21 days.	Immediate action. The 21-day window is the only opportunity to stop funds from transferring to the IRS. File CDP request, establish hardship, or negotiate release within 21 days.
669	Wage levy issued (Form 668-W sent to employer). Employer must comply. IRS can take up to 70%+ of take-home pay.	Immediate action. Establish installment agreement, OIC, CNC, or CDP hearing to release. Each paycheck is gone once garnished.
670	Payment posted to account.	Verify payment applied to correct period. If a levy payment, confirm whether it was voluntary or seized — affects OIC strategy.
694	Levy released (Form 668-D). IRS removed the levy.	Confirm release in writing. TC 694 on transcript plus Form 668-D from IRS are both needed for documentation.
520	Bankruptcy filed or other legal proceeding opened. CSED clock stops from this date.	Pull full transcript history. Calculate tolling: actual proceeding duration + 6 months added to CSED after TC 521 posts.
521	Bankruptcy or legal proceedings closed.	Restart CSED calculation from TC 521 date plus 6 months. Recalculate full statute before advising on resolution path.
530	Currently Not Collectible (CNC). Active collection paused. CSED continues to run.	Note closing code (CC 24/32/39 = hardship). Monitor for IRS annual review. Interest and penalties continue to accrue during CNC.

Resolution and Status Codes

These codes track the resolution process — what's been submitted, what's been accepted, and what the current account status is.

TC	Meaning	CSED Impact
480	Offer in Compromise submitted. OIC is in the system and under review.	CSED tolled from TC 480 date forward. Clock stops while OIC is pending.
480 (withdrawn)	OIC withdrawn by taxpayer before determination.	CSED resumes from withdrawal date. No additional 30-day buffer — clock restarts immediately.
781	OIC accepted. Liability settled per OIC terms.	CSED ends — liability resolved. Confirm compliance terms: returns filed, payments made, no new liabilities for 5 years.
782	OIC rejected. IRS declined the offer.	CSED resumes + 30 days after rejection date. 30-day appeal window opens. File Form 13711 to appeal to Appeals if warranted.
780	OIC pending — IRS has the file and is actively reviewing.	CSED tolled. No collection action while TC 780 is active.
971 AC 043	Installment agreement established.	No CSED toll in most cases. Collection activity suspended while IA is current. Tax lien may still be filed on balances over $10,000.
971 AC 063	Installment agreement defaulted.	Collection resumes immediately. IRS issues CP523 (notice of intent to terminate IA). 30 days to reinstate before levy authority returns.
971 AC 086	Taxpayer signed CSED waiver (Form 900) as part of OIC process.	CSED extended by the waiver period. This is separate from normal OIC tolling. Review Form 900 for exact extension dates.
971 AC 035	Refund offset applied — IRS intercepted a federal refund and applied it to the balance.	No CSED impact. Credit reduces balance. Confirm the offset was applied to the correct tax period.

Notice Codes — TC 971 and Action Codes

TC 971 is the catch-all notice and account action code. The action code (AC) after it tells you exactly which notice was issued or which action was taken. These are the action codes that change a case strategy.

TC 971 + AC	Notice / Action	Why It Matters
971 AC 069	LT11 — Final Notice of Intent to Levy and Notice of Your Right to a Hearing.	The 30-day CDP window opens on this date. Miss it and the automatic levy hold is gone. File Form 12153 within 30 days.
971 AC 071	CP90 — Final Notice, Notice of Intent to Levy. Same effect as LT11 for CDP purposes.	Same 30-day CDP window as AC 069. Treat identically.
971 AC 043	Installment agreement input — IA has been established in the system.	Confirms IA is active. Cross-reference with client's payment schedule.
971 AC 063	Installment agreement in default.	Client missed a payment or filed a new liability. 30 days to cure before levy.
971 AC 086	Statute of limitations extension signed.	Taxpayer has extended the IRS collection window. Review exact dates.
971 AC 035	Refund offset — federal refund applied to balance.	Reduces balance. Verify correct period and amount.
971 AC 501	Offer in Compromise — OIC submitted and assigned.	Confirms OIC is in the system. CSED toll begins.
972	Notice rescinded. Reverses a TC 971 action.	Identify which TC 971 it reverses. If it reverses an LT11, the CDP window may have been reset — confirm with IRS directly.

Which Codes Affect the CSED

The Collection Statute Expiration Date is 10 years from TC 150. These events pause or extend it. Every one of them needs to be identified on the transcript and calculated before advising any client on statute strategy.

TC / Event	Tolling Period	How to Calculate
TC 480 — OIC submitted	TC 480 date to TC 781/782 date	Add that span + 30 days post-rejection to base CSED
TC 520 — Bankruptcy filed	TC 520 date to TC 521 date	Add that span + 6 months to base CSED
TC 971 AC 069 — CDP hearing requested	Request date to Appeals determination date	Add full hearing duration + 90 days to base CSED
TC 971 AC 086 — CSED waiver signed	Per Form 900 dates	Add exact extension period from the signed form
Living outside the US	Actual time abroad (minimum 6 months)	Document with passport records; add to base CSED
Military active duty	Active duty period + 270 days	Verify with DD-214 or service records
Taxpayer Assistance Order	TAO duration	Pull TAO dates from case file and add to base CSED

Most accounts have at least one tolling event. Accounts with prior bankruptcies, prior OIC submissions, or CDP hearings can have CSED dates that are 2–4 years past the naive 10-year calculation. Never quote a statute date without working through every tolling event on the transcript first.

Codes That Require Immediate Action

These codes have hard deadlines attached. When they appear on a transcript, the response window is measured in days, not weeks.

TC	Deadline	Consequence of Missing It
971 AC 069 (LT11)	30 days from notice date	CDP rights lost. Levy authority activates. Equivalent hearing available but no automatic levy stop.
668 (Bank levy)	21 days from levy date	Funds transfer to IRS. Irreversible.
669 (Wage levy)	Each pay period	Funds garnished each payroll cycle until released.
971 AC 063 (IA default)	30 days from CP523 notice	IRS terminates installment agreement and reinstates full levy authority.
782 (OIC rejected)	30 days from rejection	Appeal rights lost. CSED resumes. Must refile new OIC or pursue alternative resolution.
420 (Exam open) approaching ASED	TC 608 date	IRS will request statute extension (Form 872). Deciding whether to sign requires analysis — do not ignore.

Managing a firm with 40 or 50 active cases means these deadlines are distributed across dozens of client files. TaxRes CRM's client management keeps every active case in view, with deadline tracking built into the case workflow — so a TC 668 on a Friday afternoon doesn't get buried in email over the weekend.

Frequently Asked Questions

Tax situations vary significantly. This article is for informational purposes and does not constitute legal or tax advice. Transaction codes and IRS procedures may change — verify current guidance through IRS.gov or IRS Document 6209 before relying on specific codes in active cases.