IRS Transcripts
Code 291 on Your IRS Transcript: Tax Reduced, Explained (2025)
The short answer: code 291 on your IRS transcript means the IRS reduced the tax it had previously assessed for that year. It's almost always good news — your balance went down, and if you already paid, a refund or credit may follow. The dollar amount shows as a negative because it lowers what you owe.
What code 291 means on an IRS transcript
Your account transcript is the IRS's internal ledger for one tax year. Every action — tax assessed, payments, penalties, refunds — gets a three-digit transaction code and a dollar amount. Code 291 is labeled "Reduced or removed prior tax assessed."
In plain English: at some earlier point the IRS recorded a certain amount of tax for that year. Code 291 walks part or all of that back. The number next to it is the size of the reduction, and it appears as a negative figure (often with a minus sign) because it's subtracting from your liability.
If you're not sure how to find this line, our walkthrough on how to read an IRS account transcript shows where the transaction codes sit and how the running balance is calculated.
⏱ What to watch for: a 291 by itself only adjusts your balance. If money is coming back to you, a code 846 (refund issued) or code 826 (overpayment applied to another year) usually posts within a few weeks. No deadline action is required from you — but keep checking the transcript until you see where the money landed.
Code 290 vs. code 291: the difference
These two codes are mirror images, and people mix them up constantly:
- Code 290 — Additional tax assessed. The IRS added tax. The amount is positive and raises your balance.
- Code 291 — Reduced or removed prior tax assessed. The IRS subtracted tax. The amount is negative and lowers your balance.
It's common to see a 290 from an earlier change followed by a 291 later — that's the IRS correcting or reversing the first adjustment in your favor. A 291 of $0.00 is also normal; it just means a reduction was processed without changing the dollar figure (often paired with another code that does the work).
Why you got a code 291
The IRS reduces an assessment for a handful of reasons. The most common:
- You filed an amended return. If you corrected a mistake that lowered your tax, the IRS records the drop as a 291. See amending a return to lower a tax debt if this is your situation.
- An audit or audit reconsideration went your way. When a review lowers the tax the IRS first proposed, a 291 records the reduction.
- A CP2000 or notice dispute was resolved. If you proved income was reported wrong or already accounted for, the assessment gets walked back.
- The IRS corrected its own error. Math fixes, misapplied income, or a duplicate assessment can all trigger a reduction.
- A claim or carryback was processed. Certain credits or loss carrybacks reduce a prior year's tax.
Penalties are handled by their own codes (for example, code 271 or 277 reduce penalties; 196 and 197 handle interest). So if your real goal was getting a penalty removed, check for those lines too — our guide to first-time penalty abatement explains how that relief shows up.
Will code 291 get you a refund?
Not automatically. It depends on whether you already paid the tax that just got reduced.
Here's a simple worked example. Say the IRS assessed $8,000 of tax for a year, and you paid all $8,000. Later, an amended return drops your correct tax to $5,500. A code 291 posts for -$2,500. Because you already paid in full, that $2,500 is now an overpayment. You should then see one of these on the transcript:
- Code 846 — Refund issued. The date beside it is when the IRS sent the money.
- Code 826 — Overpayment applied. The $2,500 was moved to a different tax year you owed.
If instead you hadn't paid and still owed $8,000, the same 291 simply drops your balance to $5,500 — no refund, just less to pay. Either way, a reduction is a win.
What happens if you ignore a code 291
Good news here: a 291 is a reduction in your favor, so there's no penalty for "doing nothing." But don't assume the money sorts itself out. A few things are worth checking:
- Confirm the reduction matches what you expected. If you filed an amended return for $2,500 and the 291 only shows $1,200, something may have been processed differently than you intended.
- Track the refund or credit. If you paid the tax and no 846 or 826 appears after several weeks, the overpayment may be sitting on your account unrefunded.
- Watch for offsets. A refund created by a 291 can still be taken for other debts — back taxes, child support, or student loans. Our guide to the Treasury Offset Program explains how that works.
The IRS won't chase you over a reduction — but it also won't always alert you if a refund stalls. The transcript is your best window into what actually happened.
How to respond, step by step
- Pull the full account transcript for that tax year. If you don't have it yet, follow our steps for getting your IRS transcript online.
- Find the code 291 line and note the date and the negative dollar amount. That's the size of the reduction.
- Recalculate your balance. Subtract the 291 amount from the prior assessed tax. Compare that to the balance shown in your IRS online account.
- Look for a follow-up code. An 846 means a refund went out; an 826 means it was applied elsewhere. No follow-up code yet usually means it's still processing.
- If the numbers don't match what you expected, gather your amended return, audit result, or notice and the documentation behind it before you call the IRS.
- If you owe on other years or the reduction is part of a bigger dispute, have an experienced tax professional review the whole transcript so nothing gets missed.
Not sure what your transcript is telling you?
Send us a copy. An experienced tax professional will read every code — including the 291 — and tell you exactly what it means for your balance and any refund. Free, confidential, no pressure.
Code 291 questions, answered
Is code 291 on my IRS transcript good or bad?
It's almost always good news. Code 291 means the IRS reduced the tax it had previously assessed for that year. Your balance went down, or — if you already paid — a refund or credit may be on the way. The dollar amount next to the code shows up as a negative number because it lowers what you owe.
What's the difference between code 290 and code 291?
Code 290 is an additional tax assessment — the IRS added tax. Code 291 is the opposite: it removes or reduces tax that was previously assessed. You'll often see a 290 from an earlier adjustment and a 291 later when that adjustment is corrected or reversed in your favor.
Will code 291 mean I get a refund?
Sometimes. If you already paid the tax that was just reduced, the overpayment can become a refund or a credit applied to another year. Watch for a later code 846 (refund issued) or code 826 (overpayment applied) on the same transcript. If you still owe more than the reduction, it simply lowers your balance.
How long after code 291 do you get a refund?
There's no fixed rule, but a refund tied to a reduction often posts within a few weeks of the 291. The clearest signal is a code 846 with a date next to it — that's the date the IRS issued the refund. Until you see an 846 or 826, the reduction has been recorded but the money hasn't moved yet.
Why does code 291 show a date in the future?
The date next to a transaction code is the IRS's official processing or cycle date, not the day the action actually happened. It's normal for that date to be a week or two ahead of when you're reading the transcript. The reduction is already recorded — the date just marks when it posts in the IRS system.
This guide is general information, not tax or legal advice for your specific situation. Eligibility for IRS programs depends on individual facts and circumstances; no outcome is guaranteed. For the official list of transcript types, see Get Transcript on IRS.gov and Understanding Your IRS Notice or Letter.