How “Data Anomaly Detection” Is Causing Refund Delays for Honest Filers
Many taxpayers are shocked to discover their return — even one that is perfectly legitimate and accurately reported — is being delayed by new IRS screening systems. The reason isn’t fraud, error, or missing paperwork. It’s something completely new:
AI-driven data anomaly detection.
These automated systems are designed to spot statistical irregularities or unusual financial patterns. But in practice, that means even a clean return can get flagged and thrown into manual review.
The IRS Has Moved Beyond Basic Matching
Historically, the IRS flagged returns for:
- mismatched W-2 or 1099 income
- incorrect Social Security Numbers
- incorrect filing status
- missing signatures
- income/credit mismatches
But now, the IRS uses AI-level behavioral analysis.
New anomaly detection triggers include:
- unusually large Earned Income Tax Credit compared to prior year
- sudden spike in business income
- unusually large refund compared to historical trend
- deductions suddenly expanding year-to-year
- return patterns similar to known fraud submissions
- filing from a different device or IP than past years
- multiple filings associated with same household or address
You can file a return 100 percent truthfully and still get flagged.
The Resulting Transcript Code: TC 570
When AI flags a return, the system places it on hold:
TC 570 – Additional account action pending / Refund hold
This is not an accusation of fraud.
It’s simply an internal freeze.
And AI filters are generating more TC 570 holds than any other year.
Why Is AI Flagging So Many Honest Returns?
Because AI doesn’t look for proof of fraud — it looks for deviation from patterns.
Examples:
Case 1:
A taxpayer normally receives a $1,200 refund.
This year, due to deductions and credits, they qualify for a $5,800 refund.
AI says: “Unusual. Flag.”
Case 2:
A gig-worker suddenly earns double the prior year’s 1099 income.
AI says: “Suspicious spike. Flag.”
Case 3:
Self-employed filer reports $0 income for three years, then $38,000 the next year.
AI says: “Pattern break. Flag.”
In reality?
- promotions
- job changes
- additional work
- better record-keeping
- corrected tip reporting
- employment changes
- expanded family credits
- qualifying events
- new children or dependents
These are life events — not fraud.
But AI doesn’t evaluate life.
It evaluates statistical variance.
What Happens After the AI Flag?
Once flagged:
- TC 570 posts (refund hold)
- The return enters manual or hybrid review
- If no issue is found
- TC 571 (hold lifted) eventually posts
- TC 846 (refund issued) follows
But the wait can extend:
- 21 days becomes
- 45 days
- sometimes 60–120 days
This is especially common for those claiming:
- EITC
- ACTC
- Premium Tax Credit
- new OBBB deductions
- business income
- self-employment adjustments
- new dependents
- amended entries
The Most Common AI-Triggered Holds
AI disproportionately flags:
- first-time EITC recipients
- large jumps in income
- returns after job changes
- Schedule C filers
- tip-based workers
- college-related credit claims
- dependent-related adjustments
- large refunds relative to taxes paid
Even a totally valid combination of:
- TC 150 (Return Filed),
- TC 806 (Withholding),
- TC 766 (Credit Applied),
can be paused by TC 570 simply because the system sees “something unusual.”
How to Prove Your Return Is Legit
While the review is frustrating, the IRS typically wants:
- W-2 copies
- 1099 forms
- employer verification
- dependent documentation
- proof of earned income
- school tuition statements
- bank statements
- prior year returns for comparison
And increasingly:
uploading documents via the IRS online account
instead of mailing them can shave weeks off the hold.
Should You Call the IRS?
If TC 570 is recent — calling won’t help.
But if:
- 45+ days have passed
or - you receive a letter (TC 971 reference)
or - you get a CP05, 4464C, or 2645C
Then contacting IRS or using the IRS document upload tool matters.
Final Advice for Taxpayers
If your return is flagged:
- don’t panic
- don’t re-file
- don’t amend unless instructed
- don’t change numbers
AI doesn’t mean “you did something wrong.”
It means “the system wants a human to double-check.”
