Topic Number 652 - Notice of Underreported Income – CP-2000
The IRS compares the payment 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. The Automated Underreporter (AUR) function uses an automated system for this comparison and sends out a Notice CP-2000 if you didn't report income on your return that was reported to the IRS by a payer or if it appears that payments, credits, and/or deductions are overstated. 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.
In addition, the CP-2000:
- Shows the amounts you reported on your original or amended return
- Shows the amounts reported to the IRS by the payer
- Shows 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
- Shows the changes the IRS proposes to the tax, credits, and/or payments
- Proposes either an increase or decrease to your tax liability based on the payer documentation, and
- Includes a response form, payment voucher, and an envelope.
Review the information on the CP-2000 carefully to verify its accuracy and so you know exactly how you should respond. On the response form, indicate whether you agree with all, some, or none of the changes the IRS is proposing. You can also authorize someone other than yourself to contact the IRS concerning the notice in the space provided on the response form.
Responding to the notice:
- If you agree with the proposed changes, complete and sign the response form, and return it in the enclosed envelope. The proposed changes will generally show interest calculated 30 days from the date on the notice; certain penalties may also apply but may not be shown. If you pay the proposed amount within 30 days, that payment will stop additional interest from accruing as well as certain penalties that may apply if payment is made after the 30 day period. The notice also lists payment options. 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're unable to pay, see Topic No. 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'll be contacted later with payment information. If your request for an installment agreement is approved, you may be charged a user fee.
- If you don't agree with some or all of the changes, don't sign the notice. Instead, explain in a separate signed statement why you don't agree. Attach the statement and supporting documentation to the response form for consideration and send it back to the address listed in the notice. 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 in the upper right-hand corner of page 1. Once the IRS receives your response, we'll make the corrections for you. If you notice the same type of error occurring 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 Should I File an Amended Return? and Topic No. 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. 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 within the 30 or 60-day period, AUR will issue a statutory notice of deficiency and additional interest and penalties will be charged as appropriate.