Do you need CP2000 help? If you’ve received this notice from the IRS, it can be a big shock. A CP2000 Notice is an official notice from the IRS notifying you of incorrect information in your tax return.
If the IRS relays that you’ve overreported, you may end up with more money back in your pocket.
However, if the IRS relays that you’ve underreported, you’ll need to act. For most, this information is the result of a genuine mistake. For some, it is the result of an IRS error.
No matter your situation, we’re here to guide you through the process of understanding and responding to your IRS CP2000 Notice.
IRS Notice CP200: What is an Automated Under Reporter notice?”
In some cases, the data provided to the Internal Revenue Service (IRS) by taxpayers does not match that of the recipient’s tax return. Anyone who owns a company, hires vendors, or generates legal income in the US is going to be taxed on it. This is why banks, employers, and third parties are constantly reporting to the IRS. Now, if a taxpayer files an inaccurate tax return or is dishonest with their reported figures, the IRS will compare the tax return to the information they have and if they identify differences, notify the taxpayer.
This notification is called an IRS tax notice CP2000.
What Does an Automated Under Reporter Inquiry (AUR) IRS CP2000 Notice Mean?
In short, this notice is an auto-generated report that means that you have made a mistake in the reporting of your income on your tax return.
The IRS compares the payment information given to them by banks, employers, businesses, and other payers (1099, 1098, etc.), and places it side-by-side with your tax return. They then assess how your reported income, credits, and deductions pair with their original data.
If your data does not match the IRS’s, the AUR (automated underreporter function), which is integrated in the IRS’s system, will automatically generate a CP2000 notice with this information. The IRS will then pass this notice along to you.
Through this process, the IRS is looking for undeclared income. In most cases, undeclared income is simply a mistake made by the taxpayer on their tax return. In rarer cases, it is a deliberate evasion of income tax. Regardless, when the IRS sends a CP2000 notice, they are effectively saying, “We see there is a mistake with your income value; here is your chance to fix it.”
Under Reporter Inquiry: Should I Be Worried?
If you happen to be the recipient of a CP2000 notice, you shouldn’t automatically worry. CP2000 Notice is simply a document the IRS sends proposing that you revisit your claimed income, payments, credits, or deductions. These changes will either result in more taxes owed or a larger credit.
By no means is the CP200 a bill, nor is it an audit letter. Now that you can rest assured this document does not state you are being penalized, you can begin understanding your CP200.
Understanding Your IRS Tax Notice CP2000
The first page of the CP2000 should include three things: a summary of the IRS’s proposed changes, and a list of steps you should take to address the notice, and where you should send your response. Additionally, it will:
- Present the original amount(s) reported
- Present the data on the IRS’s side given to them by the taxpayer(s)
- Present the payer’s ID, name, types of documents used, and the taxpayer ID(s)
- Present the proposed changes to the tax, credits, or payments as administered by the IRS
- Propose an increase or a decrease in the amount the recipient is liable for
- Include an attached response form, voucher, and an envelope
How to Respond to IRS Notice CP2000
The first step when dealing with a CP2000 is always to address the accuracy of what is being stated. If you’ve made a mistake in your filing, you’ll need to explain your mistake. If you believe that the IRS made a mistake, you have the opportunity to dispute it.
The following steps will guide you through the process of responding to your IRS CP2000 Notice with the response of your choice.
Step 1: Gather Information
This falls in line with the aforementioned advice. When gathering information, you should:
- Compile the forms you used to file your taxes (W2s, 1099s, etc.)
- Evaluate the forms you used and compare them to the CP2000
Does the information match?
If the answer is yes, then you’ll need to calculate the additional tax owed. Be sure to check the accuracy of your information multiple times. Responding to a CP2000 notice with more inaccurate information might raise a serious flag with the IRS.
If the answer is no, you have the right to contest penalties and appeal the CP2000 notice. Ensure that your documents back up the information you believe is correct. You’ll need to use these to compose your appeal.
Send the IRS a Response
If you agree with what is being proposed, submit your CP2000 notice to the IRS with either a check or money order attached. If you do not have all funds to do so, you can request a tax payment plan or another solution available via IRS Fresh Start. You must include this request in your response.
If you disagree with any part of the IRS’s CP2000 notice, then you must use your documents to prove your appeal argument. If you plan to do so, we strongly recommend you hire a tax professional, as they will be experienced in writing CP2000 Notice responses and will be able to assist you in composing your response.
If your appeal is accepted, the IRS will correct the return on their end and your taxes will remain unchanged.
If the IRS rejects your response, you can either agree to their terms and rectify the situation by submitting payment, or you can choose to appeal the decision once again.
IRS CP2000 Response Mailing Address
For the fastest response possible, fax your CP2000 Notice response to the number listed on your notice.
If you would prefer to mail, send your CP2000 Notice back to the address listed on your notice.
If you need assistance, you can contact the IRS at the number listed on your notice, and a representative can assist you.
The Processing Time
It can take anywhere from a month to three years for the case to be fully resolved. We recommend that you do not simply mail the response and leave it to the IRS, but instead reach out and ensure that your notice has indeed been received and is being processed. If you allow the notice to sit without action, it can become a bill and that bill can accrue penalties and interest.
Resolve an IRS CP20000 Notice: Actions and Timing Explained
Resolving a CP2000 notice can happen rather quickly; it all depends on your timing and response.
- A prompt and thorough response: can be resolved in 1 month
- An incomplete response that requires followup: can take up to 9 months to resolve
- A late response: requires a CP2000 consideration and can take up to 3 years to resolve
Prevent Underreporting Issues: Tips to avoid future CP2000 problems
The following are our best tips for ensuring you can avoid future underreporting problems:
- Check every tax form that you receive to ensure its accuracy, including those from your employer, bank, and more.
- Ensure you have all income forms prior to filing your taxes. Filing taxes before receiving an income statement is a surefire way to underreport.
- File an amended return if you realize you have underreported or made another mistake.
IRS CP2000 Upkeep
The IRS takes underreported income seriously. If the IRS finds that you have several instances of misreporting, they may investigate and find that you owe more on previous returns, as well. That is why we recommend that you work with a tax professional for your tax preparation services and income tax service, so that you can ensure your taxes are filed without issue. They can also assist with tax fraud information, in the event that your CP2000 notice has been issued as the result of fraudulent behavior.