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What You Must Know When Responding To IRS Notice CP2000

When you receive Internal Revenue Service Notice CP2000, you wonder what has gone wrong.  Notice CP2000 is not an audit.  Notice CP2000 simply lets you know there appears to be a mismatch between the income reported on your return and the income information reported to the IRS.  

When you respond to the IRS notice you want to ensure your rights are preserved.  Notice CP2000 comes with a response form attached.  It is really easy to give away some rights when you respond unless you understand the pitfalls.  Before you simply check the box, take the time to read further.

Preserve Your Right to Dispute Your Penalties

Even if you agree you forgot to claim some income, do you agree with the penalties that are being proposed?  The IRS almost automatically adds accuracy and negligence penalties to your CP2000 Notice.  This is 20% of the tax the IRS’s tax assessment proposing and can be significant.  If you believed you made a mistake that...

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I Received IRS Notice CP2000. What Do I Do?

You received the Internal Revenue Service (IRS) Notice CP2000 because there was a discrepancy between what you reported to the Internal Revenue Service and what was reported to the Internal Revenue Service by third parties.  The IRS receives information from third parties about the amount of income you receive.  Your employer informs the IRS the amount of wages that are paid to you when your employer files your W-2 form.  If you are an independent contractor, the IRS receives Form 1099 which reflects the income you received.  If you sold a house during the year, the amount of the sale is reported on Form 1099-S.  If it appears there was income that was reported to the IRS but not reported on your tax return, the IRS will mail a Notice CP2000.

IRS Notice CP2000 outlines the discrepancy and additional taxes, penalties and interest you may owe for the missing income.  Notice CP2000 is not an audit.  It merely lets you know your file has been red...

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