If you have received a notice from the IRS that is “CP2000,” don’t panic. We lay out for you what to do and how to avoid receiving them in the future:
Tips and Timing to Resolve an IRS CP2000 Notice
Taxpayers can get a CP2000 notice if the IRS determines that a taxpayer did not report all income on their return. The best way to resolve a CP2000 notice quickly is to respond on time with a thorough response that addresses all issues, including penalties, but keep in mind that you can also ask for more time.
Understanding your IRS CP2000 Notice
- The first step when dealing with a CP2000 is always to proof the accuracy of what is being stated.
- Read your notice carefully. It explains the information received and how it affects your tax return.
- The first page of the CP2000 should include three things: a summary of the IRS’s proposed changes, the appropriate phone number, and a list of steps you should take to address the notice.
How do I respond to a CP2000 Notice?
- Complete the notice Response form whether you agree or disagree with the notice. The response form explains what specific actions to take.
- Before responding to the notice, gather information and compile every document (W2s, 1099s, etc.) and evaluate the forms you used and compare to the CP2000 notice received.
- Make sure that the information on the CP2000 notice is accurate and matches the tax return. If the information is wrong or if you disagree, do note that you have the right to appeal the proposed adjustments.
How to get more time?
- If you need more time, don’t wait too long to request for more time. It’s best to get a hold of the IRS at least one week before deadline.
- You or your tax advisor can call the IRS to ask for more time to respond. Have your IRS notice and tax return information on hand when you call.
- Normally IRS will give you up to 30 additional days to respond to the notice.
What happens if I miss the deadline?
- If you miss the deadline and the IRS proceeds to assess the taxes, penalties, and interest, you will need to request CP2000 reconsideration.
- In this process, you respond to the appropriate IRS compliance unit with a complete response that addresses all items on the original CP2000.
- CP2000 reconsideration is a common solution because many taxpayers’ responses miss the deadline, or their responses are not fully addressed by the IRS.
You can avoid a CP2000 Notice
- It is easy to avoid a CP2000 if you report all of the items correctly. Keep accurate and full records of your tax information. Wait until you get all of your income statements before filing your tax return.
- Check the documents you get from your employer, bank, or other sources of income to make sure they’re accurate.
- You can always file an extension to give you more time to file before the 10/15 deadline.
- In July, the IRS has gathered most of your information statements to compare against the return you have filed. After early July, you can order the IRS transcript of your information statements on file with the IRS (“Wage and Income Transcript”).