IRS Reference Code 1242: The IRS Froze Your Refund for a Return Review

What the IRS list says

Exhibit 21.4.1-3 of the Internal Revenue Manual describes code 1242 as "Electronic return received more than 3 weeks ago; –E Freeze; in review, notice for additional information will be received," and code 1241 as "Paper return received more than 6 weeks ago; -E Freeze; in review, notice for additional information will be received." Both point to the -E freeze section, IRM 21.5.6.4.10.

What a -E freeze is

The manual says Compliance or Return Integrity and Compliance Services places transaction code (TC) 810 on the account, which shows on an account transcript as TC 810. The IRS list pairs the freeze with "in review," so the refund waits until the review ends.

IRS phone staff cannot release it. For an account with a TC 810, the manual tells them, "You cannot resolve it," and to look up the responsibility code on the freeze.

How long it takes

For one review type, the manual tells IRS staff to "advise the taxpayer to allow 180 days from the date of the TC 810 RC 7." It also tells them to "advise the taxpayer the return is being reviewed." The letter you get sets your own deadline to answer.

What to do

Watch your mail and your IRS online account for the letter. When it arrives, answer by its deadline and send what it asks for; the manual tells staff to "advise the taxpayer to respond to the notice/letter and provide any requested information."

Our refund hold guide explains the other common holds. The index of all 38 codes covers the rest.

What people mistake code 1242 for

Some people treat code 1242 as a rejected return. The IRS has the return; the code itself says "electronic return received."

Others call the IRS again and again. The manual tells phone staff they cannot resolve a TC 810 freeze, so the letter is the way forward unless 180 days pass with no letter.