Notice of Underreported Income – CP-2000

The IRS compares the information reported by employers, banks, businesses and other payers on Forms W-2, 1098, 1099, etc., with income and deductions you report 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 is not a bill. It informs you of the IRS’ proposed adjustments to income, payments, credits, and/or deductions. This may result in additional tax owed or a refund of taxes paid.

The first page of the notice provides a summary of proposed changes to your tax and the steps you should take to respond. If you have any questions, the notice provides a phone number to call for assistance.

The notice will show the amounts you reported on your original or amended return, the amounts reported to the IRS by the payer, and the proposed adjustments by the IRS. The notice also provides the name of the payer, the payer’s ID number, the type of document that was issued (i.e., W-2, 1099), and the tax identification number of the person to whom the document was issued. Based on payer documentation, the notice proposes either an increase or decrease to your tax liability. Be sure that you review this information carefully to verify its accuracy.

The notice includes a response form on which you should indicate whether you agree with all the changes, or do not agree with some or any of the changes the IRS is proposing. The response form also allows you to authorize someone other than yourself to contact the IRS concerning the notice and provides payment options.

If you agree with the proposed adjustments, complete and sign the response form and return it to the IRS in the enclosed envelope. The proposed adjustments will generally show interest calculated to 30 days from the date on the notice. Additionally, certain penalties may also apply but may not be shown. You may pay the amount you owe within 30 days from the date of notice, make a partial payment, 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. If you are making a payment, be sure to use the enclosed payment voucher to ensure proper application of your payment. If you are unable to pay the proposed amount, you may request a payment arrangement to pay the amount you owe. If you wish to pay the amount in installments, you must complete and sign the “Installment Agreement Request” ( Form 9465 (PDF)) and return it to the IRS with the response form. The IRS will contact you later with payment information. If your request for an installment agreement is approved, the IRS may charge you a fee.

Do not file an amended return ( Form 1040X (PDF)), for the tax year shown in the upper right hand corner of page 1. The IRS will make corrections to your tax liability for the tax year listed on the notice after we receive your response. If the same or other errors occurred in any prior or subsequent years as those listed on the CP-2000, however, you may wish to file an amended return for those years in order to prevent or reduce the accrual of penalties.

If you do not agree with any changes, or do not agree with some of the changes, in the notice, do not sign the notice. Instead, explain in a signed statement why you do not agree, attach the statement and supporting documentation for consideration to the response form, and submit the response form 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. An envelope will be enclosed for your convenience. If you have misplaced the envelope, please send your response to the address listed on the first page of the response form. Send your response, a copy of the notice you received, and any other necessary documents (e.g., a signed statement of disagreement and supporting documents) to the address on the notice. If you are making a payment, use the provided payment voucher to ensure correct application to your account.

If the IRS does not hear from you within the 30 or 60-day period, and there is a proposed balance due, a statutory notice of deficiency will be issued and additional interest will be charged.

Source: Internal Revenue Service
Last reviewed: September 26, 2013