Post updated April 2023
What Is a CP2000? Untangling CP2000 Help
A CP2000 notice is a letter from the IRS alerting taxpayers that their reported income does not match that computed by the agency. The letter is not an audit notification, but it does:
- Provide a detailed description of discrepancies identified by the agency
- Signify underreported income
- Require immediate response
When a taxpayer receives a CP2000 notice, it means the IRS has determined through information provided to it by financial institutions, employers, and other third parties that the taxpayer has underreported their income and owes more tax. The disparity could be a small amount, related to a simple correction, or more complicated and involve larger amounts of money and multiple returns.
If your tax returns don’t match the IRS records on file, you’ll receive a CP2000 notice. Also known as an underreporter inquiry, this notice states that you can face penalties, such as taxes or interest, because of discrepancies in the information filed under your Social Security Number. Your situation can also grow more complicated depending on the number of returns and the amount the IRS is contesting.
However, there isn’t someone in an office checking every digit between your tax return and IRS files. CP2000s are computer-generated, and issues can often be resolved without facing penalties. With the help of an experienced tax attorney, your penalties can often be reduced or negated completely, so if you find yourself with a CP2000 letter, always seek out an experienced attorney for CP2000 help.
Read on to learn more about what a CP2000 is, how to respond to CP2000 using a CP2000 disagree letter, and where to turn for CP2000 help.
How long does it take to get a CP2000?
A CP2000 notice is automatically triggered if your tax return is flagged with Code 922 in the IRS’s internal database, and the IRS automatically sends the CP2000 letter 6 months afterward. Since it takes at least 6 months between filing your taxes and receiving a CP2000 letter, this means if you know of a discrepancy between your tax return and your actual income for the past year, you can actually submit an amended return before the IRS even sends you a CP2000 letter! This can potentially save you money in the form of penalties and interest you may no longer have to pay.
How To Respond to a CP2000
First, you should check to see if you actually underreported your income. Compare any and all forms under your Social Security Number with your tax return to see if you left anything off. From there, you can choose whether to agree with the IRS’s assessment, partially agree, or disagree.
Once you’ve made your decision, you need to formally respond to the IRS. If you agree with their notice, send back the CP2000 response form along with payment. But if you partially agree or disagree with the CP2000 notice, you must mail your response to the IRS with documentation proving your side.
CP2000 Response: How To Write a CP2000 Disagree Letter
The CP2000 notice will either be accompanied by a response form or contain instructions on the notice itself for further actions. Generally, a taxpayer has 30 days to respond to the IRS. While the notice is not a bill, interest does accrue on any amounts until they are paid.
Three ways to respond to IRS notice CP2000:
- If a taxpayer agrees with the CP2000 notice — they can follow the instructions on the response form or notice, sign, and return it.
- If a taxpayer disagrees with the IRS’s new assessment — then they may appeal the IRS’s recalculation.
- If a third party, such as a bank or employer, has reported incorrect information causing the discrepancy — it is the taxpayer’s responsibility to contact the third party and ask them to submit a correction to the IRS.
Sometimes a discrepancy will have an impact on other returns. Taxpayers should review their other returns for the same mistake and respond accordingly.
When you disagree with the IRS’s assessment, your response is known as a CP2000 disagree letter.
Sample Response Letter to IRS CP2000
If you disagree with the IRS’s assessment, it’s imperative to respond promptly, and with all the evidence you can gather. Waiting until after the penalty or fine has been assessed only complicates the situation further.
A CP2000 disagree letter could look like this:
Your Taxpayer ID
The tax year in question
Re: IRS CP2000 Notice Disagreement
To whom it may concern:
I received your notice dated [month, day, year]. Enclosed is a copy of the IRS notice in question, assessing a penalty on my account in the amount of [amount owed]. Upon carefully reviewing the notice and my own tax records, I have checked page [notice page] indicating that I do not agree with the changes to my tax return proposed by the IRS.
Express your disagreement with the IRS CP2000 for the tax year in question, providing an item-by-item explanation of your disagreement, with facts and figures to back up all statements and explain all discrepancies.
Enclose copies of all documents cited
However you choose to respond to a CP2000 notice, The attorneys at Wiggam Law are here to provide you with all the CP2000 help you need, no matter what your situation is.
What happens if you don’t respond to Notice CP2000?
If a taxpayer ignores the CP2000 or doesn’t respond by the due date, the IRS will follow up with CP-3219-A, which is a statutory notice of deficiency. These notices are more serious and require more than simply following instructions and filling out a form or requesting an appeal. A challenge to this notice requires filing a petition with the U.S. Tax Court by the date specified on the notice. The court does not accept late petitions.
In other words, whether the IRS Notice CP2000 is accurate or not, your best option is to respond within 30 days (60 days if you live outside the United States) to either agree, disagree, and/or inform a third party of their need to submit a correction to the IRS.
After submitting your proposed changes, you can usually expect an IRS response between 30 and 90 days.
What is an IRS Audit Reconsideration Letter?
Similar to a CP2000 disagree letter is an IRS Audit Reconsideration letter, which is a letter you can send if you disagree with the results of an IRS audit.
When taxpayers are dissatisfied with the results of an IRS audit or didn’t file a return and then disagree with the tax liability computed by the IRS, they can request an audit reconsideration. Unlike the IRS’s structured appeals process, where requests for review by an independent agent are mostly granted, audit reconsideration is totally discretionary. The IRS decides when and to whom to grant a reconsideration based on information submitted by the taxpayer.
What’s in an Audit Reconsideration Letter Sample?
To request an audit reconsideration, a taxpayer must present evidence not considered in the initial audit or a completed delinquent return showing a different result. In addition, the taxpayer should not pay any assessment, and have exhausted all other options for questioning the IRS’s decision, such as filing a petition in Tax Court.
The audit reconsideration letter is a cover letter explaining the taxpayer’s request. It is sent to the IRS along with:
- A statement detailing the issues the taxpayer disagrees with
- Copies of supporting documents for the new evidence, such as Forms 1099, bank statements, or canceled checks
- Copies of letters, audit reports, and any other correspondence that the taxpayer has received from the IRS
The IRS generally suspends any collection efforts while it is considering your request. While penalties and interest still accrue, the agency is, in effect, giving an extension on debt collection actions.
While it might be tempting to write the cover letter and put together the request package on your own, the discretionary nature of the reconsideration process calls for the expertise of a tax attorney. An experienced attorney can identify pertinent new evidence and make a solid case for reconsidering your audit results or tax assessment based on a Substitute for Return compiled by the IRS.
What is a Response Letter to an IRS Audit?
A response to an IRS audit letter differs from a request for reconsideration letter. The request for reconsideration letter asks the IRS to reconsider the results of a completed audit or Substitute for Return. In contrast, an audit response letter is the correspondence you send when you have received an IRS audit letter. An IRS audit letter notifies you that your return has been selected for audit.
If you receive an IRS audit letter, you should:
- Respond as soon as possible
- Definitely respond within 30 days of the letter’s date to avoid penalties
- Respond by telephone or letter
How to Write an Audit Response Letter
As with the request for reconsideration letter, speaking with an experienced tax attorney to determine your response strategy and write the letter is the best course of action. The letter should:
- Include taxpayer details such as full name, Social Security Number, and contact information
- Address each issue noted in the IRS audit letter and why you disagree
- Request a time and date to meet with the IRS
- Be accompanied by copies of supporting documents
An audit response letter must be carefully worded to meet the IRS’s specifications. An experienced tax attorney can craft a well-written response letter that accelerates the process and helps reach a quick resolution.
What Happens if You Don’t Respond to an IRS Audit Letter?
If you don’t respond to an IRS audit letter, respond late, send an incomplete response, or respond incorrectly, you will likely receive a tax bill, with penalties and interest, from the IRS. This response means the IRS has disallowed the items in question.
In other words, it’s in your best interest to respond on time, completely, and correctly to an IRS audit letter or CP2000 notice if you disagree with the IRS’s assessment or audit results.
That’s easier said than done, of course, which is why it’s best to have experienced tax attorneys in your corner who can help out with every aspect of dealing with the IRS.
Have Questions? Consult With The Experienced Tax Attorneys at Wiggam Law
If you’ve received a CP2000 notice or IRS audit letter from the IRS and need assistance on how to proceed, we can help. The experienced attorneys at Wiggam Law can help you navigate the situation, recommend the best course of action, and assist you in dealing with the IRS or the Georgia DOR. We have extensive experience with helping clients draft CP2000 disagree letters and IRS audit reconsideration requests to get the best results and resolve their tax issues.
For IRS audit and CP2000 help, contact metro Atlanta’s top tax and bankruptcy attorneys online.