Topic Number 652 - Notice of Underreported Income – CP-2000
The IRS receives information from third parties such as employers and financial institutions which doesn’t match the information reported on your return. Using an automated system, the Automated Underreporter (AUR) function performs a comparison to identify potential discrepancies between the information reported by third parties and what was reported on your return. When a potential discrepancy is identified a tax examiner further reviews the return, comparing the information reported to the IRS by employers, banks, businesses, and other payers on income documents (Forms W-2, 1098, 1099, etc.) to the income, credits, and deductions you report on your income tax return. If a discrepancy exists, a Notice CP-2000 is issued. The CP-2000 isn't a bill, it's a proposal to adjust your income, payments, credits, and/or deductions. The adjustment 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, a phone number to call for assistance, and the steps you should take to respond.
The CP-2000 provides:
- The amounts you reported on your original or amended return
- The amounts reported to the IRS by the payer
- 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
- The proposed changes to your income, tax, credits, and/or payments
- A Response form, payment voucher, and an envelope.
Review the information on the CP-2000 carefully for accuracy. Determine if you agree or disagree with the proposed changes and how you should respond. On the Response form, indicate whether you agree or disagree with all, some, or none of the proposed changes. If you would like to authorize someone other than yourself to contact the IRS concerning the notice, include the information requested in the Authorization section of the Response form.
Responding to the notice:
If you agree with the proposed changes, complete, sign and date the Response form (we require both spouses’ signatures if you filed married filing jointly), and return it in the enclosed envelope. The CP2000 generally includes interest which is calculated from the due date of the return (regardless of extensions) to 30 days from the date on the notice; certain penalties may also apply but may not be shown. Interest continues to accrue until the amount due is paid in full. Payment of the proposed amount within 30 days will stop additional interest from accruing as well as certain penalties that may apply. You may choose to submit payment of the proposed amount or you can wait until the adjustment to your account has been made and a bill is received. You can choose one of the payment options listed on our Payments page. If making a payment, be sure to use the enclosed payment voucher to ensure proper application of your payment. You can apply, by mail, for an installment agreement (payment plan) by sending in your signed Response form AND a completed Form 9465.pdf, Installment Agreement Request. If your request for an installment agreement is approved, you may be charged a user fee.
If you don't agree with the proposed the changes, mark the appropriate box on the Response form and send it to us along with a signed statement explaining why you disagree. Include any supporting documentation you would like us to consider. Send the Response form and supporting documentation to the address listed on the notice by the due date. Include your phone number with area code and the best time of day to call.
Don't file an amended return (Form 1040X.pdf) for the tax year shown on page one of your notice. Once we receive your response, we'll make the corrections for you. If you notice the same type of error occurring in another tax year, file an amended return for that year to prevent or reduce the accrual of penalties. See Should I File an Amended Return? and Topic No. 308 for more information about amended returns.
Visit Understanding Your CP2000 Notice for more information about the notice and frequently asked questions. You may also use Publication 5181.pdf, Tax Return Reviews by Mail CP2000, Letter 2030, CP2501, Letter 2531.
Respond within 30 days of the date of the notice or 60 days if you live outside the United States for a quick resolution. Use the enclosed envelope to send your Response form and any other necessary documents. If you've lost the envelope or it wasn't enclosed, please send your response to the address listed on the first page of the Response form.
If we don't hear from you by the response date on the notice, we’ll send you a Statutory Notice of Deficiency.
Additional information is available on this YouTube video, IRS Letter CP2000: Proposed Changes to Your Tax Return. The video tells taxpayers why they received this letter from the IRS and how to respond if they agree – or disagree – with the proposed changes.