Collection is suspended because bankruptcy or another legal action was recorded. Here is what it means, what usually happens next, and what to do.
On your account transcript it reads: 520 Bankruptcy or other legal action filed Hold or watch
TC 520 records that a bankruptcy or another legal action affecting collection has been filed, suspending IRS collection on the account. Several kinds of legal action sit behind it; bankruptcy is the most common.
Reversal code: TC 521 — Legal-action hold reversed. When it posts after this code, the effect above is undone.
Also written as: IRS code 520, code 520 on transcript, 520 IRS code, transaction code 520.
Collection stays suspended while the proceeding is open. When it ends, TC 521 posts and collection can resume on any balance that was not discharged.
| On the same transcript | What it usually means |
|---|---|
| 520 → 521 | Legal action closed; collection may resume. |
| 520 + 470 | Another collection hold is also open. |
Tax treatment depends on the chapter and discharge rules.
Unfiled returns can affect the case.
Discharged years should show adjustments.
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Decode my transcript →A bankruptcy or other legal action was recorded, pausing collection.
The legal-action hold was reversed — the proceeding closed or no longer applies.
On your IRS account transcript for the tax year — in your IRS Online Account under tax records, or by mail using Form 4506-T. The transactions section lists each code with its description, date and amount. Return transcripts do not show transaction codes.
Yes. IRS code 520, code 520 on transcript, transaction code 520 and TC 520 all refer to the same three-digit transaction code the IRS posts to your account.