IRS Notice CP 2000 is referred to as the Notice of Proposed Adjustment for Underpayment/Overpayment and is among the most common notices sent out by the IRS.
The IRS compares the information reported by employers, banks, businesses and other payers on forms W-2, 1098, 1099, etc., with income and deductions reported on your income tax return. If you failed to report any income, payments, and/or credits (or if you overstated certain deductions) on an income tax return, you may receive a Notice CP-2000.
The notice informs you of the proposed adjustments to income, payments, credits, or deductions, and the adjusted amount of tax due (or to be refunded to you). The first page of the CP-2000 is called the “Summary Page”. It provides a brief summary of the notice and instructions on what you should do to determine if you agree or disagree with the proposed changes.
The notice will show the adjustments proposed by the IRS, the amounts you reported on your original return, and the amounts reported to the IRS by the payer. The notice will also provide the name of the payer, the payer’s ID number, the type of document that was issued (i.e.; W-2, 1099), and the Social Security number of the person to whom the document was issued. Based on the adjustments to your income, the notice proposes either an increase or decrease to your tax liability (or an increase to the amount of your refund due). Be sure that you review this information carefully to verify its accuracy.
The notice includes a response page on which you should indicate whether you agree or disagree with the proposed adjustments. On the response page, you may authorize someone other than yourself to discuss with or to provide information to the IRS regarding the proposed changes. This page should be attached to your response.
If you agree with the proposed adjustments, sign the response and return it in the enclosed envelope. Notice that the proposed tax listed on the notice may not include any interest and/or penalty that you may owe. You may pay the amount you owe within 30 days from the date of notice, or you may send the signed consent without payment, and the IRS will bill you for the amount due plus additional penalty and/or interest charges. You may request a payment arrangement to pay the amount you owe. If you wish to pay in installments, you should complete and return the installment request form enclosed in the notice and return it with your response page. You will be contacted later with payment information. If an installment agreement is approved, you will be charged a fee. Do not file an amended return Form 1040X, for the tax year shown in the upper right hand corner of page 1. These are only proposed adjustments and the tax liability is not yet assessed. The IRS will correct this tax year when they receive your response. If the same or other errors occurred in any prior or subsequent years as those listed on the CP-2000, you may wish to file an amended return in order to prevent or reduce the accrual of penalties. You should consult a CPA or tax attorney with IRS experience to provide you with IRS tax help in filing an amended return.
If you do not agree with any part of the notice, do not sign the notice. Instead, check Option 2 or 3, on the response page, explain in a signed statement why you do not agree, attach the statement and supporting documentation for consideration to the response page, and submit the response page and attachment to the IRS. Include your phone number with area code and the best time of day to call.
You must respond within 30 days of the date of the notice or 60 days if you live outside the United States. Send your response, a copy of the notice you received, and any other necessary documents (for example, a signed statement of disagreement and supporting documents) to the address on the notice.
If the IRS does not hear from you within the 30 or 60 day period, a statutory notice of deficiency will be issued and additional interest will be charged.
It has been our experience that many of the proposed adjustments contained in Notice CP-2000 may be incorrect. You should consult a tax professional with experience in IRS collection matters and audit representation to respond to IRS notices you receive and provide you with tax relief.