If you receive a CP2000 Notice with a small proposed amount due, contacting a tax professional may not be practical. But if the notice states you owe a substantial amount and you disagree or are not sure of that assessment, what is a cp2000 notice a tax professional may be able to help you to save your hard-earned money. Moreover, if a taxpayer has a change on a federal tax return then most likely they need to submit an amended state tax return (if applicable).
IRS CP2000 Notice – Responding to an Automated Under-Reported Letter
Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court.
- Send it (along with the response form) to the IRS address printed on the CP2000.
- If there are additional expenses, credits, and/or income you may want to file an amended return.
- Most likely, the IRS staff wants to help you discuss the changes proposed in the notice.
- For example, suppose you did not report nonemployee compensation, but the IRS has a Form 1099-NEC on record reporting an income of $6,000.
- The notice doesn’t necessarily mean that the IRS is trying to fine you with penalties.
Silver Tax Group Locations
Therefore, a taxpayer or their representative can prepare an amended tax return before the IRS sends the CP2000 notice. The accuracy-related penalty is generally 20% of the understatement of tax if the taxpayer has additional taxes owed of more than $5,000. Therefore, paying a licensed tax professional to monitor your account transcript for a small fee could save you thousands of dollars. Complete the form on page seven of your Letter CP 2000 to show whether you agree or disagree with the changes the IRS is proposing in the letter.
- Please schedule a consultation with our Seattle tax attorney today.
- If it does not change the tax balance higher or lower, you can often call in and get the adjustment.
- If you are married and filed the return jointly, your spouse must also sign the response form.
- In some cases, disagreements could lead to adjustments in the proposed tax due, penalties, or the need for further clarification.
- You can resolve any issues at this point without further escalations.
What To Do if You Disagree With the Proposed Changes
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. 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. If you’d like help finding support in dealing with the IRS, Bench can connect you to a certified enrolled agent who can handle the case on your behalf. If you suspect you might be the victim of identity theft, contact the IRS and your state tax agency.
What to Do if You Agree but Cannot Pay the Entire Amount
- Also, before responding to the CP2000 notice, you need to determine if you failed to report the income the IRS claimed you did not report.
- If you agree with our notice, follow the instructions to sign and return the response form in the envelope provided or fax it to the number shown on the notice.
- Some tax professionals can predict CP2000 notices up to 6 months before the IRS sends them.
- We help small businesses catch up on their bookkeeping ensuring all prior financial records are complete and accurate, putting you in a better position to respond to the IRS.
- The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights.
Do not just rely on the IRS phone call, even though it should start the investigation into identity theft. Identity theft cases can get overwhelming quickly, and maybe a real mess to sort out. You will want to double-check your financial activity for the year cited before you conclude whether the figure on the notice is correct. Let’s dive into what it is, what it means, and your options from here.
IRS CP2000 Response Mailing Address
If you disagree, explain why you disagree and provide any documents or information that supports your position. Make sure to submit all documents and information to the IRS by the due date to the address in the letter. If you fax the information, include your name and Social Security number or Taxpayer Identification Number on each page. The IRS receives information from third parties, such as employers and financial institutions. Using an automated system, the Automated Underreporter (AUR) function compares the information reported by third parties to the information reported on your return to identify potential discrepancies.
Topic no. 652, Notice of underreported income – CP2000
If you’re not sure how to proceed, you might need a bit more time. It’s important to note that a CP2000 notice is no reason to panic. It’s quite common to get one, and they don’t always result in an increased bill. Do not let a mistake, fraudulent activity, or administrative issues affect your financial security and peace of mind. Please schedule a consultation with our Seattle tax attorney today. You may qualify for financial hardship if your income is insufficient to cover living expenses under the IRS’s standards.
This letter contains a “summary of proposed changes” section that provides the amount you owe if the IRS’s information is correct. Sure, when the IRS sends you a notice that your reports are incorrect, it can be overwhelming. It just wants to make sure if the AUR citations are valid and if you agree with such citations. The IRS is merely notifying you that the information did not match. The notice doesn’t necessarily mean that the IRS is trying to fine you with penalties. It’s when you ignore a CP2000 the IRS penalizes you for willful disregard of underreporting.