how to respond to cp2000

It can take anywhere from a month to three years for the case to be fully resolved. We recommend that you do not simply mail the response and leave it to the IRS, but instead reach out and ensure that your notice has indeed been received and is being processed. If you allow the notice to sit without action, it can become a bill and that bill can accrue penalties and interest.

How to Understand & Respond To An IRS CP2000 Notice

In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List. Letter CP 2000 is sent to notify what is a cp2000 notice you that one or more items on your return don’t match what was reported to the IRS by third parties (e.g., employers or financial institutions). If you accidentally misreported your tax information, you may be able to call the IRS and make corrections over the phone so long as the correction won’t increase or decrease the tax you owe.

Get help with your CP2000 notice

  • They will start an investigation and may be able to resolve it that way.
  • Therefore, the CP2000 notice will usually be for a prior-year tax return.
  • By responding to this letter in time, you can avoid the substantial understatement tax penalty that the IRS lists under the proposed changes.
  • Upon responding to the CP2000 notice with your explanation, you can expect to wait up to eight weeks for a response from the IRS.
  • A tax professional from our trusted tax resolution partner can help you navigate the CP2000 notice and any taxes owed from it.

The IRS website recommends writing “CP2000” at the top of your return and attaching it behind your completed response. If you do not agree with the changes, you can check the relevant box on the response form (I don’t agree with some or all of the changes). Then, you need to return the response form and include a signed statement explaining why you disagree with the proposed changes. You must also include copies of supporting statements, such as your W-2 or Form 1099. Under a monthly installment agreement, you can make monthly payments towards your tax debt, making this liability more manageable. To apply for an installment agreement, complete and include Form 9465 (Installment Agreement Request) when responding to the CP2000 notice.

Send the IRS a Response

how to respond to cp2000

Still submit a response to the CP2000 within the deadline stating that you believe you are a victim of identity theft. 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.

The summary of proposed changes on a CP2000 notice may include a failure-to-file penalty or a substantial understatement tax penalty. While the first is 5%, the latter penalty is typically 20% of the tax you owe, increasing the liability significantly. The IRS typically includes a response form with the CP2000 notice you must complete and submit. If you did not receive a response form, you need to follow the instructions on the notice.

how to respond to cp2000

Do I need to file an amended return?

The IRS compares the payment information given to them by banks, employers, businesses, and other payers (1099, 1098, etc.), and places it side-by-side with your tax return. They then assess how your reported income, credits, and deductions pair with their original data. In conclusion, responding to an IRS CP2000 notice doesn’t have to be a daunting task. Ensure you understand the information and implications, confirm your financial documents, and address the notice promptly and correctly.

  • This discrepancy may cause an increase or decrease in your tax or may not change it at all.
  • Anyone who owns a company, hires vendors, or generates legal income in the US is going to be taxed on it.
  • The notice explains what information we used to determine the proposed changes to your tax return.
  • Requesting an extension doesn’t guarantee the agency will grant the additional time.
  • When the IRS sends you a CP2000 notice, the agency allows you to review the discrepancy and explain why you disagree with the notice.
  • You must also include copies of supporting statements, such as your W-2 or Form 1099.

If you disagree with some or all of the proposed changes, then you’ll need to mail a response to the IRS that proves your position. Compile all of your tax and income-related documents and include them with your response. Attach a corrected return to clarify your position (but don’t actually file an amended return).

For immediate help call ( 515-4829 and we’ll assist you. You can also fill out the form below.