When you file your tax return, the IRS reviews it for accuracy. If the IRS finds that the information on the tax return does not match the information the IRS has received from third party sources, like banks, employers, business and others, they will send Notice CP2000 to inform you about the discrepancy and how it affects your taxes.
The corrections on a tax return can either lead to an increase or a decrease in taxes. If there is an increase in your tax liability, you will need to pay the excess. If there is a decrease in your tax bill, the IRS will send you a refund. The difference can also lead to no change your tax bill.
Notice CP2000 contains information on how the IRS found the discrepancy and their conclusions about the changes in the tax information. If you believe that the third party information the IRS received is inaccurate, then you may use the response form included with the Notice to communicate why you disagree. Remember you must have facts or proof to successfully challenge the IRS’ claims.
If the review of your tax return led to an increase in your tax bill, then you must try to pay the amount to resolve the issue. You do not need to file an amended return if you do not have additional income, credits or expenses to report. You only need to follow the instructions on CP2000 and post it back to the IRS.
If you cannot pay the extra tax amount in a single payment, then you may consider using an Installment Agreement to pay it in monthly installments. Know that the IRS will begin to charge penalty and interest on the amount due to be paid after the filing deadline. If your financial situation does not allow you to pay the full amount, request the IRS to allow you to pay the balance in installments or contact a tax resolution service to help you set up a payment agreement.
Make changes to the copy of the tax return you have so that you have the correct figure on it. Always keep a copy of every IRS notice you receive for record in case the IRS chooses to audit in the future.