Have you ever received an IRS CP2000 letter in the mail? Did you start breathing faster and you don’t know what to do? Before you panic, I will share with you some tips on how to handle IRS CP2000 notices.
Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.
You usually get the CP2000 letter when your tax return does not match with the information the IRS has (like Forms W-2 and 1099). The letter basically proposes taxes and penalties for missing income on your return. The letter is not considered an audit but it’s very important that you respond in a timely manner.
Here are six tips that you can use when you receive the CP2000:
- Review and determine if you correctly reported the income in question on your tax return by gathering all the forms under your social security number.
- Determine whether you agree, partially agree or disagree with the notice.
- If you agree with the notice, send the response form back to the IRS together with your payment. If you can’t pay the entire amount, you can request an installment agreement with your response.
- If you partially agree or disagree with the notice, you will need to mail a response to the IRS together with your tax support to prove your case. You can attach a corrected return to help simplify your position, but you don’t need to file an amended return. If the IRS accepts your explanation, the IRS will correct your return.
- You can also address any proposed penalties in your response by providing a reasonable cause or explanation on why they need to waive the penalties
- If the IRS rejects your response, you can consider appealing the decision.
Now, to prevent this in the future, gather all your information before filing. You can also request your wage and income tax transcripts from the IRS so you can compare what information they received from third parties. However, please be aware that the wage and income transcripts don’t contain all your Forms W-2 and 1099 until late May.
So those are six tips that you can use when you receive the CP2000 letter.
Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com.