How to Send Your CP2000 Response to the IRS

The Internal Revenue Service (IRS) CP2000 notice communicates potential discrepancies between information reported on a tax return and data received by the IRS from third parties. This notice informs taxpayers of proposed changes to their tax liability, which can arise from underreported income, incorrect deductions, or other mismatched data. Responding to a CP2000 notice is crucial for resolving the issue and avoiding further complications, such as additional penalties or interest. Taxpayers must review the notice and understand its implications to formulate an appropriate and timely response.

Understanding the CP2000 Notice

A CP2000 notice is issued by the IRS when an automated system, known as the Automated Underreporter (AUR) unit, identifies a mismatch between the income, credits, or deductions reported on a taxpayer’s return and information submitted by third parties. These third parties include employers, banks, brokerage firms, and other entities that provide income statements like Forms W-2, 1099, or 1098 to both taxpayers and the IRS. The notice proposes adjustments to a taxpayer’s income, payments, credits, or deductions.

The IRS uses third-party information reporting to help ensure accurate tax compliance. When a discrepancy is detected, the CP2000 notice details the amounts reported on the original tax return, the amounts reported to the IRS by the payer, and the proposed changes to the tax liability. This notice is not a bill or an audit, but a proposal for adjustment that may result in additional tax owed or a refund. The notice also provides response options, typically requiring a reply within 30 days, or 60 days if living outside the United States.

Preparing Your Response

Thoroughly compare the income and payment information detailed in the CP2000 notice with your own financial records. This includes reviewing documents such as W-2s for wages, various 1099 forms (e.g., 1099-INT for interest, 1099-DIV for dividends, 1099-B for stock sales, 1099-NEC for nonemployee compensation), K-1s for partnership or S corporation income, and relevant bank or brokerage statements.

After reviewing the notice against your records, decide whether you agree or disagree with the proposed changes. If you agree with all or part of the proposed adjustments, indicate this on the response form included with the CP2000 notice. If additional tax is due, you may include payment or request an installment agreement using Form 9465, Installment Agreement Request. If you disagree, provide a clear, signed statement explaining your position and attach all relevant supporting documentation.

Supporting documentation is essential. This can include corrected income statements, proof of income not previously reported, or documentation to substantiate deductions or credits. For instance, if a 1099 form was issued incorrectly, obtaining a corrected document from the payer is necessary.

Avoid filing an amended tax return (Form 1040-X) unless the CP2000 notice is entirely correct and you are acknowledging additional income or changes. If you choose to amend your return, clearly write “CP2000” at the top of the amended return and attach it to your response. Always keep copies of everything you send to the IRS, including the signed response form, supporting documents, and any correspondence, for your records.

Sending Your Response

The CP2000 notice specifies the exact mailing address where your response should be sent. Use the address printed on your specific notice, as these can vary depending on the IRS service center handling the correspondence. Do not send your response to a general IRS address or the address used for filing your tax return.

For proof of mailing and delivery, send your response using certified mail with a return receipt requested. This service provides a mailing receipt and electronic verification that your mail was delivered or that a delivery attempt was made. This documentation can be invaluable if there are any questions later about whether your response was received by the IRS. Only send copies of your supporting documents, never original records, as the IRS will not return them.

In some instances, the CP2000 notice may offer an online response option through a specific IRS portal or a fax number. If available on your notice, you may submit your prepared response electronically. Using an online portal requires careful navigation to ensure all necessary documents are uploaded correctly. If faxing, confirm the fax number provided on the notice and consider using a service that provides a confirmation of transmission.

What to Expect After Sending

After sending your response, the IRS will review the information. Processing time can vary significantly, typically ranging from several weeks to a few months, or potentially longer depending on the complexity of the case and IRS workload.

Several outcomes are possible after the IRS reviews your response. If the IRS agrees with your explanation and supporting documentation, they may send a “no change” letter, indicating no further action is required and your original return is accepted as filed. If the IRS still believes additional tax is owed, they will send a notice of tax due, which is a bill for the proposed amount, along with any applicable interest and penalties. The IRS may also send another letter requesting additional information or clarification before making a final determination.

If you do not receive a response within the expected timeframe, you can follow up with the IRS. The CP2000 notice usually includes a phone number for assistance; calling this number can provide an update on your case. Keep all copies of the CP2000 notice, your response, and any supporting documents indefinitely. These records are crucial for future reference and can be used if any further correspondence or issues arise concerning that tax year.