TC 922 and the Underreporter Program: Reading the Process Codes

The IRS receives information returns from employers, banks, brokers and other payers, and it compares them against what taxpayers report. When the numbers do not line up, a case opens in the Automated Underreporter program, usually called AUR. The letter most people receive from that program is a CP2000.

On the account transcript, the AUR case shows up as TC 922. The code by itself does not tell you much. The process code attached to it tells you a lot.

What TC 922 is

Document 6209 titles TC 922 "IRP Underreporter" and calls it the "IRP Underreporter status transaction." It "posts to tax module balance section," and "the transaction date and process codes are updated by subsequent TC 922." It "will not affect status history section."

That last sentence matters. TC 922 is a status marker. It does not assess anything. When the case produces an assessment, the assessment posts separately, usually as a TC 290.

IRP stands for the Information Returns Program, the system that ingests W-2s, 1099s and similar documents. Your wage and income transcript is the taxpayer-facing view of that data. See Account Transcript vs. Wage and Income Transcript.

The process codes

Document 6209, Section 8C, contains the individual underreporter process code tables and cites IRM 4.19.3 for the full procedures. The table for tax year 2003 to the present includes the codes below. Taxpayer transcripts do not always print the process code, but representatives with access to IRS systems can see it, and it is worth asking for.

Read the codes as a path. Selection, then a soft inquiry or a CP2000, then either a closure, an agreement, or a statutory notice, then an assessment or a default. The highest-numbered recent process code tells you roughly where the case sits on that path.

Soft notices and the CP 2501

Not every underreporter contact is a CP2000. The 6209 process code table includes code 07 for an "AUR Soft Notices selected case" and code 19 for "AUR Soft Notice issued, closure." It also includes code 30 for a CP 2501 and code 57 for a CP 2000 issued after a CP 2501.

In practice, that means the program has lighter-touch steps before a formal proposal. A CP 2501 asks you to explain a discrepancy. If the explanation resolves it, the case can close. If it does not, a CP2000 can follow. Treat the earlier letter as the cheaper opportunity to fix the problem. It is.

CP2000 is a proposal, not a bill

The CP2000 proposes changes. It is not an assessment. The process codes show this structure. A CP2000 (PC 55) can lead to agreement (PC 67), a no-change closure (PC 70), a referral to examination, or a statutory notice of deficiency (PC 75).

The statutory notice is where your formal rights live. IRC 6213(a) gives 90 days after a notice of deficiency is mailed (150 if addressed outside the United States) to petition the Tax Court, and generally bars assessment until that period runs or a timely petition is decided. If no petition is filed, IRC 6213(c) says the deficiency shall be assessed. Process code 90, "Assessed by default," is what that looks like from the IRS side.

That is the single most important thing to understand about an underreporter case. Ignoring a CP2000 does not make it go away. It moves the case toward a statutory notice, and ignoring that moves it toward a default assessment.

Payments during an AUR case

Some taxpayers pay a CP2000 balance before it is assessed. Document 6209 defines TC 640 as an "Advance Payment of Determined Deficiency or Underreporter Proposal" and says it is "also used to post URP CP-2000/Stat. Notice Payments." The module is frozen from refund and offset out while the advance payment sits unapplied.

When the case closes with an assessment, the TC 640 freeze releases. The 6209 freeze table lists release by TC 29X in certain blocking series identified for the individual AUR program. In plain terms, the assessment posts, the advance payment applies to it, and the account settles. More on payment codes in Payment Codes on Your Transcript.

How the AUR result posts

An underreporter adjustment that increases tax posts as TC 290, the additional tax assessment code for adjustments to a module with a processed return, typically with interest following as TC 196. Document 6209's older process code table expressly describes an adjustment using TC 29X with reference numbers 806 and 807 for withholding discrepancies, which is the AUR program correcting withholding credits.

So the sequence on the transcript is usually TC 922 with a series of process code updates, then a dollar TC 290, then interest. If the result was no change, you will see the TC 922 close with a no-change process code and no TC 290. See TC 290: Additional Tax Assessed.

When AUR becomes an exam

Some underreporter cases are referred to examination. The process code tables include closures to field audit, office audit and campus examination. Document 6209 also says a TC 424 examination request indicator can be generated when "an IRP Underreported Case is referred to Exam." If you see those, the case has changed character. The rules are now the examination rules, and the codes to watch are TC 420, TC 424, TC 300 and TC 421. See TC 420 and TC 421.

Suspense codes: bankruptcy and innocent spouse

Two process codes at the end of the table tell you the case is paused rather than closed. Code 98 is "Bankruptcy Suspense" and code 99 is "Innocent Spouse Suspense," each also applicable to employee cases. If your underreporter case has gone quiet and you are in bankruptcy or have a pending innocent spouse request, one of these may be why. The bankruptcy side is covered in TC 520: Bankruptcy and Litigation Codes.

Related codes: TC 924 and TC 925

Document 6209 lists two neighbors. TC 924 is an IRP communication transaction that posts to the individual master file and is updated by later TC 924 postings; 6209 notes it may be generated when a TC 140 or TC 922 posts with an interest and dividend amount of $500 or more, and refers to backup withholding procedures. TC 925 is the business master file status transaction for IRP underreporter, CAWR and business non-filer work. If you own a business, a TC 925 on the business account is the counterpart to the individual TC 922.

The clock the IRS is working against

Underreporter cases happen after a return has posted, and that matters. IRC 6501(a) generally requires the IRS to assess within 3 years after the return was filed. A statutory notice of deficiency suspends the running of that period under IRC 6503(a) for the time the IRS is prohibited from assessing, plus 60 days. So the timing of the statutory notice is not arbitrary. When you are evaluating an underreporter case on an older year, find the TC 150 date and the return received date, and ask whether the assessment period is still open.

Joint returns

A mismatch on a joint return is a mismatch for both spouses on that module. If you have since divorced or separated, the CP2000 still goes to the joint account. Process code 99, innocent spouse suspense, exists because these cases sometimes turn into a dispute about which spouse is responsible for the unreported income.

Reading a TC 922 case correctly

• Pull the wage and income transcript for the year and compare it, document by document, to the return.
• Identify the specific mismatch the CP2000 describes. Often it is a single document.
• Check whether the payer reported correctly. Wrong amounts, wrong years and duplicate filings happen.
• Look for income you reported in a different place on the return. A matching program compares lines, not intentions.
• Respond by the date on the notice, with documents.
• Track the process code and the TC 290 that closes the case.

In an underreporter case, the documents you send are your case. Send clear ones, on time. Knowledge is protection, and in an AUR case the knowledge is on two transcripts you can get yourself.