IRS Error Resolution and Manual Processing: When Returns Leave the Automated System

Most tax returns move through the IRS quietly and efficiently, processed by automated systems designed to handle millions of filings at scale. But when something doesn’t line up—missing data, conflicting information, fraud indicators, or technical issues—your return can be pulled out of automation and sent into manual processing.

This is where timelines change dramatically. Returns that require human intervention may take 120 days or longer, even when the taxpayer did nothing “wrong.”

This article explains what happens when a return leaves the automated pipeline, how the IRS Error Resolution System (ERS) works, the role of Rejects Analysis, Code and Edit, and RIVO (Return Integrity Verification Operations), and why these cases move so slowly.

The IRS Automated vs. Manual Processing Divide

Under normal conditions, IRS systems:

• Validate the return
• Post it to the Master File
• Apply credits and payments
• Issue refunds automatically

Manual processing begins when automation cannot confidently complete one of those steps.

Once a return exits the automated stream, it must wait in line for an IRS employee to review, correct, or verify it—often with limited taxpayer visibility.

What Triggers Manual Processing?

A return may be diverted to manual processing for many reasons, including:

• Missing or incomplete forms or schedules
• Conflicting SSNs, names, or dependent information
• Income or withholding mismatches
• Credit eligibility questions (EITC, ACTC, fuel credits)
• Identity theft indicators
• Duplicate return detection
• System validation failures
• Prior-year account issues
• Internal formatting or transmission anomalies

Importantly, manual processing does not automatically mean audit or fraud. It often means the system needs clarification it cannot generate on its own.

The Error Resolution System (ERS)

The Error Resolution System (ERS) is the IRS’s primary environment for handling returns that fail automated processing checks.

What ERS Does

ERS allows IRS employees to:

• Review returns flagged for errors
• Correct clear, non-discretionary issues
• Route returns for additional verification
• Send correspondence when taxpayer input is required

What ERS Does Not Do

ERS does not:

• Make judgment calls on complex tax law
• Automatically issue refunds
• Bypass required verification steps

Returns in ERS are effectively paused until the identified issue is resolved.

Code and Edit: When Humans Fix the Data

Before a return can be processed, the IRS must be able to read and standardize its data.

The Code and Edit function is responsible for:

• Reviewing returns with missing, unreadable, or inconsistent data
• Assigning internal codes to ambiguous entries
• Correcting obvious clerical or transcription issues
• Preparing returns so they can re-enter processing systems

Code and Edit work is labor-intensive and heavily backlogged during filing season.

The Rejects Analysis Team

When returns fail deeper system validations, they may be routed to the Rejects Analysis Team.

This team:

• Reviews returns that could not be resolved through normal error correction
• Determines whether issues are technical, compliance-related, or integrity-related
• Routes returns to the appropriate downstream unit (ERS, RIVO, Examination, etc.)

Rejects Analysis acts as a traffic controller, deciding where a problem return must go next.

RIVO: Return Integrity Verification Operations

The Return Integrity Verification Operations (RIVO) unit focuses on refund integrity and fraud prevention.

RIVO reviews returns flagged for:

• Identity theft indicators
• Suspicious refund patterns
• Credit abuse or anomalies
• High-risk filing characteristics

Returns sent to RIVO often experience the longest delays because:

• Verification must be completed before refunds can be released
• Taxpayer identity may need confirmation
• Supporting documentation may be requested

If your return enters RIVO, automation stops completely until clearance occurs.

Why Some Returns Take 120+ Days

Once manual processing begins, delays compound:

• Returns are worked in queues, not immediately
• IRS staffing levels are limited
• Priority is given to cases with statutory deadlines
• Taxpayer responses reset processing timelines
• Multiple reviews may be required

A return may move from ERS → Code and Edit → RIVO → back to ERS before final resolution.

Each handoff adds time.

How Manual Processing Appears on Your Transcript

When a return leaves automation, taxpayers often notice:

• Long gaps between transcript updates
• Hold or review transaction codes
• Notice indicators before letters arrive
• Credits posted but no refund issuance
• No clear movement despite acceptance

This is why transcripts provide better insight than Where’s My Refund during manual review.

What Taxpayers Should (and Should Not) Do

What helps:

• Respond promptly to IRS letters
• Keep copies of all documents
• Monitor transcripts for changes
• Ensure identity verification is completed if requested

What does not help:

• Refiling the same return
• Calling repeatedly without new information
• Filing unnecessary amended returns
• Assuming silence means denial

In many cases, waiting is frustrating—but necessary.

IRS automation handles the easy cases. Manual processing exists to protect accuracy, compliance, and refund integrity when something doesn’t fit the system’s rules.

When your return enters ERS, Code and Edit, Rejects Analysis, or RIVO, the timeline shifts from days to months—not because the IRS forgot your return, but because a human now has to touch it.

Understanding this process helps taxpayers manage expectations, interpret transcript signals, and avoid actions that can slow things down even further.