Topic 652 - Notice of Underreported Income – CP-2000

The IRS compares the information reported by employers, banks, businesses and other payers on income documents like the Forms W-2, 1098, 1099, etc., with the income, credits and deductions you report on your income tax return. The Automated Underreporter (AUR) function sends out a Notice CP-2000 if you did not report income or if it appears that payments, credits and/or deductions are overstated. The CP 2000 is not a bill. It is a proposal to adjust your 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, the steps you should take to respond and a phone number to call for assistance. In addition, the notice shows:

  • The amounts you reported on your original or amended return
  • The amounts reported to the IRS by the payer
  • The IRS proposed changes to the tax, credits and/or payments
  • The payer’s name, ID number, the type of document issued (W-2, 1098, 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
  • A response form and an envelope

Review this information carefully to verify its accuracy and so you know exactly how you should respond. On the response form, you should indicate whether you agree with all the changes, agree with some of the changes, or do not agree with 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 the notice provides payment options.

Responding to the notice:

  • If you agree with the proposed adjustments, complete and sign the response form, and return it in the enclosed envelope. The proposed adjustments will generally show interest calculated 30 days from the date on the notice; 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, and making that payment will stop additional interest from running. If you make a partial payment; or you send the signed consent without payment, the IRS will bill you for the amount due plus additional penalties and/or interest charges. If making a payment, please use the enclosed payment voucher to ensure proper application of your payment. If you are unable to pay, see Topic 202 for more information about tax payment options, or you may request a payment arrangement to pay the amount you owe by enclosing Form 9465 (PDF), Installment Agreement Request, with your response. You will be contacted later with payment information. If your request for an installment agreement is approved, you may be charged a fee.
  • If you do not agree with any changes or with some of the changes, do not sign the notice. Instead, explain in a separate 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.

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 for you after we receive your response. If the same or other errors occurred in any other tax years, you may wish to file an amended return for those years in order to prevent or reduce the accrual of penalties. See Topic 308 for more information about amended returns.

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 with the enclosed envelope. If you have lost the envelope or it was not enclosed, please send your response to the address listed on the first page of the response form. If you are making a payment, use the provided payment voucher to ensure correct application to your account.

If there is a proposed balance due and we do not hear from you within the 30 or 60-day period, the AUR will issue a statutory notice of deficiency and additional interest and penalties will be charged.

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Page Last Reviewed or Updated: February 20, 2015