Payment Codes on Your Transcript: TC 610, TC 670, TC 640 and Their Reversals

"I paid that." I hear it constantly, and the person saying it is usually right. The question is where the payment went. The account transcript answers that, but only if you know which payment code you are looking at.

Payments are credits, so they appear as negative amounts. Each one carries a transaction code that says how the IRS received it and what it was for.

The main payment codes

Document 6209 adds detail to the two you will see most. TC 610 "credits the tax module with a payment received with the return." TC 670 works both ways: "If return has posted, credits the Tax Module with payment on account. If return has not posted, credits the Tax Module with prepayment on account." So a TC 670 can sit on a year before the return is filed, waiting for the liability to arrive.

Estimated payments and their freeze

Estimated tax payments post as TC 660. Document 6209 notes that the credit "is frozen from refunding or offsetting until a TC 590/591 (BMF only) or a TC 150 posts." In plain English, estimated payments wait for the return. You cannot get them back, and the IRS will not move them, until the year has a processed return.

That is one reason to file even if you cannot pay the rest. The return is what turns a pile of estimated payments into an applied credit. It is also what lets an overpayment move, refund or roll forward.

If you elected to apply last year's overpayment to this year, look for TC 716 on the new year and TC 836 on the old year. Document 6209 defines TC 716 as a generated credit that "applies the amount of credit elected and available from the preceding year's Tax Module," with TC 836 as the matching debit. Manual versions of the same transfer use TC 710 and TC 830.

Advance payments: TC 640

TC 640 exists for money paid before an expected exam or underreporter assessment. Document 6209 says the module is frozen from refunding, offsetting out or credit elect while a TC 640 is posted and no TC 300 is present, and the freeze is released when the exam assessment posts or certain other events occur. It also says TC 640 is used to post CP2000 and statutory notice payments from the underreporter program.

The 6209 entry contains a warning worth repeating. Overpayment interest is never allowed on TC 640 payments blocked 990 to 999, described as cash bonds, to the extent they exceed the deficiency they are applied to, "even if the deficiency is subsequently abated in whole or in part." If you are depositing money to stop interest during a dispute, how it is designated affects what you get back if you win. Document 6209's designated payment code 12 identifies a "cash bond credit / 6603 deposit," allowed with TC 640 only.

Designated payment codes: the hidden label

Every TC 640, TC 670, TC 680, TC 690, TC 694 and TC 700 posting voucher carries a two-digit designated payment code, according to Document 6209 Section 11. You will not always see it on a taxpayer transcript, but a representative can, and it tells you why the money came in. A few that matter in collection cases:

Why it matters: if your bank account was levied, the money shows up as a TC 670, and the designated payment code 05 is what distinguishes it from a voluntary payment. If you are trying to reconstruct what was taken and when, the DPC is the label.

Reversals: when a payment comes back off

Each payment code has a dishonored version and a correction version. Document 6209 lists TC 611 for a dishonored payment with the return, TC 641 for a dishonored advance payment, TC 661 for a dishonored estimated payment, TC 671 for a dishonored subsequent payment and TC 681 and TC 691 for dishonored designated payments. The correction codes, TC 612, TC 642, TC 662, TC 672, TC 682 and TC 692, reverse a payment that was posted in error.

Two consequences follow a dishonored payment. First, the credit comes off, so the balance goes back up. Second, a bad check penalty may post. Document 6209 says that if a dishonored payment reversal is not accompanied by a manual TC 280, a TC 286 is systemically generated. The 6209 entry gives the amount: 2 percent of the dishonored payment, or if the payment was less than $1,250, the lesser of $25 or the amount of the payment. For TC 671, 6209 notes the systemic penalty does not generate for blocking series 800 to 899, which are electronic funds transfer payments.

Also recall the rule from Document 6209 about reversed codes: on individual accounts, a payment or penalty code ending in 3 that is not otherwise listed is a reversed code that originally ended in 0. A TC 673 is described in 6209 as what an existing TC 670 becomes when a TC 672 corrects it.

Payments that went to the wrong place

Misapplied payments are common, and they are fixable. When the IRS moves a payment, the transcript shows a debit on the year it left and a credit on the year it landed. Document 6209 defines TC 820 as a manual credit transfer out, with the corresponding credit being TC 700, "Credit Applied." Automatic offsets between years use TC 826 and TC 706.

If your payment posted to the wrong year or the wrong taxpayer, you need three things: proof of payment, the transcript showing where it posted, and the year where it should have gone. Document 6209 also lists TC 760, "Substantiated Credit Payment Allowance," which "credits the Tax Module for a payment which was substantiated as having been paid, but not posted to the MF." That is the code for the payment the IRS finally agrees you made.

Credit moves are covered in more depth in Refund Offset Codes.

Designating payments yourself

The designated payment codes for interest, penalty and fee payments exist because the order of application matters. A payment applied to tax reduces the tax on which the failure-to-pay penalty is computed; IRC 6651(b)(2) reduces the amount for each month by tax paid before the beginning of that month. A payment applied to a penalty does not reduce the tax. If you are making a voluntary payment on a year with tax, penalty and interest, find out how it will be applied before you send it.

For employment taxes, designated payment codes 01 and 02 decide whether a payment goes first to the non-trust fund or trust fund portion. If you own a business with a payroll tax balance, get advice on designation before you send money, because once a payment is applied, moving it is a request, not a right.

Reading a payment history

• List every negative line by code and date.
• Match each one to your bank records. Note any you cannot match.
• Look for reversals: any 611, 641, 661, 671, 681 or 691, and any code ending in 3.
• Look for credits that moved: TC 826 out, TC 706 in, TC 820 out, TC 700 in.
• Check the year with an installment agreement for a steady pattern of TC 670 lines. See Installment Agreement Codes.

Offer in compromise money has its own labels. Document 6209 lists designated payment code 33 for the offer application fee, 34 for the 20 percent lump sum or initial periodic payment, and 35 for payments made during the offer investigation. Installment agreement user fees use codes 50 and 51. If you made those payments and cannot find them, ask what year and what designation they posted under. They do not always land where people expect.

When the bank records and the transcript agree, you know where you stand. When they do not, you know exactly which line to ask about.