Tax Dictionary – CP2000 Notice

IRS Definition:

The income and/or payment information the IRS has on file doesn’t match the information you reported on your tax return. This could affect your tax return; it may cause an increase or decrease in your tax, or may not change it at all.

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The IRS generates the CP2000 letter, Notice of Proposed Adjustment for Underpayment/Overpayment, when IRS systems detect unreported income on Form 1040.

When your tax return doesn’t match information reported to the IRS by your employers and other payers (from Forms W-2 and 1099, for example), you’ll get a CP2000 notice. These are also called underreporter inquiries.

Because the IRS automatically generates CP2000 notices, many are not correct. It’s important to follow these best practices when dealing with a CP2000 notice:

  • Respond to the IRS quickly with a corrected tax return or an explanation
  • Address any related penalties
  • Request an appeal if the IRS disagrees with your correction

Not responding to this notice means the IRS will charge you the taxes, with additional penalties and interest, and send you a bill for payment.

Learn how to address a CP2000 notice.

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