Tax season is over. Now comes the season for IRS notices — particularly a notice called a CP2000. If you’re the recipient of one or more of these letters, here’s what you need to know.
- What the notice is. The IRS matches amounts you include on your tax return with information reports such as Forms W-2 and 1099, and sends you a notice when a discrepancy occurs. The process is called the “Automated Underreporter Program” and the multi-page notice you receive is generally a CP2000. The “CP” stands for computer paragraph. The “2000” means the notice is an information return program verification request. You can identify the notice by the number printed on the top right of each page.
- What to do. The CP2000 is a proposed adjustment, not a bill. The IRS is asking you to explain the differences between the amounts reported on various information reports and what you put on your federal income tax return. These differences are provided in a summary area on the notice, and you generally have 30 days to let the IRS know if you agree or disagree with some or all of them. The CP2000 includes the forms you need for your response as well as an application for a payment plan.
Keep in mind that the IRS shares information with state revenue agencies. You may need to correct or update your state income tax filings to reflect any changes.
- When to expect a response. According to the Taxpayer Advocate office, IRS guidelines call for processing your answer within approximately 45 days. However, the Taxpayer Advocate notes the IRS receives more than ten million letters a year in response to notices and is often unable to reply within the 45-day time frame.
Please contact Dye and Whitcomb LLC whenever you receive an IRS notice. We’re here to help.