Taxpayers receive notice CP-2000 if they do not report income on their return that was reported to the IRS by a payer. Also, if the IRS believes that payments, credits and/or deductions are overstated on the return, they may send notice CP-2000. The adjustment(s) to the return may lead to the owing of taxes. In such a case, the taxpayer is required to make the payment immediately to avoid additional penalties and interest.
What Does the Notice Include?
The notice includes the changes required, how you can respond to the notice, and an IRS phone number you can contact for assistance. It also includes:
- The tax amount you reported on your return
- The tax amount the payer reported to the IRS
- The payer’s information, including name, ID number, and tax document sent (W2, 1099, 1098, etc.)
According to what was reported to the IRS by the payer, the tax filer’s liability may increase or decrease. The filer has the right to agree or disagree with some or all of the changes proposed by the IRS.
How to Respond to CP-2000
First, review your tax documents and use the information available to determine the accuracy of the IRS’ proposal. If you agree with the changes, follow these four steps:
Complete and sign the response form.
- Enclose it in the envelope provided with the notice.
- A payment voucher is attached to the notice; it must be used to make the payment, if any.
- Mail it to the address specified on the notice.
If you owe taxes, the notice will indicate the total amount due. There may be penalties applied, which may not be shown on the notice. You are required to pay the full amount owed within 30 days from the date of the notice. If no amount is paid before or after the 30-day period, the IRS begins to charge additional penalties and interest on the amount due.
If you disagree with one or more IRS’ changes, follow these steps:
Explain your reasons for disagreeing in a separate signed statement. Do not sign the notice.
- In addition to your explanation, attach any supporting documents that substantiate your claim.
- Include the explanation and supporting documents with the response form. Provide your phone number with area code, and the best time to call.
- Mail the explanation, supporting documents, and response form to the IRS.
If you cannot make full payment due to financial restrictions, you may satisfy the amount in monthly payments using an Installment Agreement. An Installment Agreement provides an affordable way to resolve back taxes that is acceptable to the IRS.