Filling out your tax forms each year might seem like a chore, but the alternative is worse. The IRS requires you to file and pay taxes on all of the money you earn during the year. This filing requirement doesn't automatically mean your return is accepted and processed, however. The IRS has various codes when tax returns are flagged, and one of those is code 1262.
What is IRS Code 1262?
The IRS uses error codes to denote problems with taxpayer filings. These error codes alert you and IRS agents that a tax return needs additional attention before it is processed. The 1262 is one such error code.
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It means that an electronic tax return was received over three weeks ago but that it is being held for review. The IRS will not process your tax return as long as the code is there and there is no action being taken.
What Happens Next?
At some point, depending on IRS workloads, an IRS agent will complete their review. In many cases, no action is required on your part and you'll be issued with your refund in the usual way. Sometimes, however, the IRS will write to you asking for more information about your tax return.
There is nothing you can do in the meantime but wait for the letter to show up so you can see what the IRS needs. Until then, your refund will be put on hold.
Consider also: Where's My Tax Refund: An Easy Guide
May Trigger an Audit
If you've made an error on your tax return, you may be audited by the IRS. This will consist of the IRS conducting a thorough investigation of all elements of your tax return. If you're a business owner, the IRS will request copies of various business documents, and will want to check all deductions you've claimed. They may audit you by correspondence or an agent may visit your business premises.
For individuals, the IRS will still check all elements of your return. Any tax deductions you claim are verified by an agent. Additionally, you will not receive a refund during this time. You may also be asked to refile your tax return if an error is found.
Consider also: Tax Audits: What Are They, Why Are You Audited & IRS Audit Outcomes
Don't Wait Too Long
If you are checking the status of your tax refund using the IRS's refund cycle chart you may find that this code has been issued for your return. Keep an eye on your mail. If don't receive any communication from the IRS within a few weeks of noticing this code, contact an IRS agent. They should be able to tell you if there is any information necessary to complete your return and issue your refund – or at least bring you up to speed with current processing times.
While you can wait for the IRS, it may be beneficial for you to initiate contact. This is especially true if you do not think that there is any error on your tax return.