IRS Account Transcript Code 806

You may see different transaction codes if you’ve requested a tax transcript from the IRS. These codes, like IRS Account Transcript Code 806, indicate the transcript status in the Individual Master File (IMF) system.

IRS transcripts are detailed records of a taxpayer’s reported income and tax payments. They also include details on the status of their return and refund. Often, when something changes or delays a return or refund status, the IRS will add a code to the transcript to communicate the change. These codes, sometimes called transaction or processing codes, are not always clear and can be confusing for consumers. However, knowing the codes and what they mean can help consumers stay informed and understand the status of their return.

When you see code 806 on your IRS transcript, don’t panic. The transcript code 806 means that the IRS has reversed a credit for withheld taxes and excess FICA on the taxpayer’s account. This is usually due to a change made by the taxpayer in their returns, and it can also happen if the IRS makes an error. Generally, the IRS will notify the taxpayer of the error and how to respond and will make any changes to the tax liability or refund amount. This is a normal and common error to see on the transcript. Thankfully, the taxpayer doesn’t have to do anything else to resolve the issue, and they can still get their refund. The only thing that may cause a delay is if the taxpayer does not respond to the notification from the IRS.

How to Respond to Transcript Code 806
IRS Account Transcript Code 806 1

How to Respond to Transcript Code 806?

In most cases, when you see Transcript Code 806 on your transcript, it will correspond to the amount of refund you claimed on your return. However, it’s best to contact the IRS directly if you have any questions. They can give you the most accurate information on your transcript and explain what it means in more detail.

Another important thing to note about Account Transcript Code 806 is that it only applies to your accounts that have withholdings. This includes W2 forms and 1099 forms and any other sources of withholding. If you have a refundable credit (such as the earned income credit) and it’s applied to your account, the IRS will usually apply any potential refund to the back taxes that are owed first.

If you see Transcript Code 806 on your transcript, it usually indicates that the IRS has reversed a previous credit that was posted to your account. This could be from a refundable tax credit such as the Earned Income Credit or due to an adjustment on your return. It can also be a result of a change in tax laws, such as the PATH Act, which changed how the Earned Income Credit is calculated.

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