IRS Transcript Code 972: Reconsideration of Your Tax Return

Tax season can be a stressful time for many individuals and businesses. If you’ve ever received a notice or transcript from the Internal Revenue Service (IRS), you might have come across various codes and terms that can be confusing. One of these codes is Transcript Code 972 – Reconsideration of Your Tax Return.” In this blog post, we’ll break down the meaning of IRS Transcript Code 972, explain when and why it may appear on your transcript, and provide guidance on what to do if you encounter it.

What is IRS Transcript Code 972?

IRS Transcript Code 972, officially titled “Reason for Reconsideration,” is a code used by the IRS to indicate that they are reevaluating or reconsidering a specific aspect of your tax return. This code is typically accompanied by a date, which corresponds to when the reconsideration process began. It’s essential to understand that Transcript Code 972 doesn’t necessarily mean there is an issue with your return. Instead, it indicates that the IRS is taking a closer look at specific details for various reasons.

Common Reasons for IRS Transcript Code 972 – Reconsideration of Your Tax Return

1. Math Errors: One common reason for IRS reconsideration is mathematical errors on your tax return. If the IRS identifies discrepancies in your calculations, they may initiate a reconsideration to correct the errors.
2. Missing Information: If your tax return is missing essential information or documentation, such as forms or schedules, the IRS may use Transcript Code 972 to indicate that they need additional details before processing your return.
3. Audit or Examination: Sometimes, the IRS may select your return for an audit or examination. During this process, they will review your financial information in more detail, and Transcript Code 972 may appear on your transcript as a part of this scrutiny.
4. Amended Returns: If you’ve submitted an amended tax return (Form 1040-X), Transcript Code 972 may appear on your transcript to signify that the IRS is reviewing the changes you made.
5. Identity Theft or Fraud Concerns: If the IRS suspects identity theft or fraudulent activity related to your tax return, they may use Transcript Code 972 to initiate an investigation.

What to Do if You See Transcript Code 972 on Your Transcript

Seeing Transcript Code 972 on your IRS transcript can be concerning, but it’s essential to approach it methodically:

1. Review Your Tax Return: Start by carefully reviewing your tax return to ensure accuracy. Double-check calculations, make sure all necessary forms are included, and verify that your personal information is correct.
2. Gather Documentation: If the IRS has requested additional documentation or information, gather and prepare the required documents promptly.
3. Contact the IRS: If you’re uncertain about why Transcript Code 972 appeared on your transcript or if you need clarification, don’t hesitate to contact the IRS. They can provide guidance and answer your questions.
4. Respond Timely: If you’ve received a notice or request from the IRS related to Transcript Code 972, respond promptly and follow any instructions provided. Delays in responding could result in further complications.
5. Seek Professional Help: If you’re overwhelmed or unsure how to proceed, consider seeking assistance from a tax professional or accountant. They can help you navigate the process and ensure compliance with IRS requirements.

IRS Transcript Code 972, “Reconsideration of Your Tax Return,” is a signal that the IRS is taking a closer look at specific aspects of your tax return. While it may initially cause concern, it doesn’t necessarily indicate a problem. It’s crucial to respond promptly, provide requested information, and seek professional help if needed to ensure a smooth resolution. By understanding the reasons behind Transcript Code 972 and following the appropriate steps, you can navigate the IRS reconsideration process with confidence and ease.