How to Handle that IRS Notice that you found in your mail box. The April 15th tax deadline has long passed. We have put the tax season behind us as we head into summer. Feeling like we have a good idea where we are financially. But now is the IRS season of sending notices. One in particular is the common CP2000 notice.
Here is How to Handle that IRS Notice If you happen to be the unlucky recipient of the CP2000.
What is the CP2000 notice?
IRS notices are identified by a number that they assign to the form. It can be found printed on the top right of each page. That is where you would see CP2000. The “CP” means “Computer Paragraph”. The 2000 is IRS defined as meaning this notice is what they call an “information return program verification request“.
The notice is the result of an IRS process called the “Automated Underreporter Program” of matching amounts that you entered on your tax return against the amounts they received on informational reports. Primarily the informational reports W-2 and the various 1099s (1099-DIV, 1099-B, 1099-INT, 1099-R, etc.). The multi-page notice CP2000 is generally kicked out when a discrepancy is detected.
What You Need To Do.
The CP2000 notice is the way the IRS proposes an adjustment to your tax return. It is not a bill. At least not yet. What the IRS does is list the differences in amounts it found between what was entered on your tax return and what it found on the various information reports. The details (differences) are in the summary area of the notice.
What the IRS is doing by sending you the notice CP2000 is asking you to explain these differences. You generally have 30 days to respond. Either by agreeing with their adjustment or disagreeing with all or part of their adjustments and their findings.
The CP2000 notice comes with all necessary forms for you to fill out. If necessary it also includes their application for a payment plan. Answering the CP2000 to the IRS may not be the end of your tax adjustment headaches. That’s because the IRS shares this information with the State Revenue Agencies. You may have to also amend and refile your State Income Tax forms.
What to Expect Next.
Based on information provided by the Taxpayer Advocate office, the IRS has guidelines that calls for them to process your answers within about 45 days. However the Taxpayer Advocate concedes that the IRS is usually unable to meet the 45 day deadline because it receives back around 10 million returned letters a year in response to their mailings of various notices, including the common CP2000. You just have to hold tight until they get back to you.
In Closing
If you get an IRS Notice that you are unsure how to handle it or have other major questions contact a tax professional. If your taxes were prepared by a tax professional then be sure to include them through this process. If you think ignoring the CP2000 or other IRS notices is the best way to go just know that the IRS may be slow but they never forget and will eventually hunt you down and collect what they believe you owe plus any of their perceived appropriate penalties and interest.
Have you ever been the lucky recipient of the CP2000 Notice?
Have you received other types of IRS Notices that made or ruined your day?