Have a Tax Question? Ask a Tax Expert
Code 1121 means that your return has been pulled from the automated processing queue for review by a human. It's the first step in the formal audit process.
Code 1201 is an administrative code that means there is a delay in processing your return. While your return was selected, something triggered a desk audit, and is an IRS agent will review it. In most situations it causes one-two weeks of an additional processing time to get your refund.
According to the IRS, 1201 is a "catch all" code when no other code applies. It was generated by the computer so if you call IRS - the agent might not know what exactly triggered the review. It may be random selection as well.
This is not an error and not an audit - this is normal IRS process - the assigned IRS agent will review your return and in most situation it will be processed without any problem.
I do not think that you need to worry at this moment - just wait couple weeks and see if the problem resolved.
If you call the IRS - representative generally see the same information that you see and does not know the real situation.
But the fact of changing the code is a good sign that you case is moving.
The exact wording from the manual :
1121 Problem identified; P-Freeze IRM 188.8.131.52.23 , P- Freeze
you may read about the meaning of the P- Freeze here - http://www.irs.gov/irm/part21/ch05s06.html
1201 All other conditions not covered by a status code - conduct account analysis
I suggest just to wait.