The IRS says my income doesn't match its records.
A CP2000 proposes changes to your return because income or payments reported to the IRS by employers, banks and others don't match what you reported. It is a proposal, not a bill, and it has a reply date. How you answer it shapes everything after.
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Talk to us about your IRS problemThis first phase is a fixed fee, set before work begins. Nothing in it obligates you to the next phase.
A proposal with a reply date.
The IRS says the notice “isn't a bill,” and that the proposed changes could increase, decrease or not change your tax.
Reply by the date on the notice
The response form lets you agree or disagree. If you disagree, you explain why and attach support. You can ask for more time.
IRS practice · IRS CP2000 guidanceIf you agree
If you agree and have nothing else to report, you follow the notice's instructions and don't need to amend. If there are other items to report, the IRS asks for a Form 1040-X with the response.
IRS practice · IRS CP2000 guidanceIf it isn't resolved
The IRS says that if you don't reply or the discrepancy can't be resolved, it may send another notice and a bill.
IRS practice · IRS CP2000 guidancePenalties can apply
Where a change produces an underpayment, a 20 percent accuracy-related penalty can apply to the portion attributable to, for example, negligence or a substantial understatement of income tax. It does not apply to any portion where you had reasonable cause and acted in good faith.
Law · IRC §6662(a), (b), (d); §6664(c)(1)Before the IRS can assess.
Generally, the IRS cannot assess additional income tax it has proposed unless it first mails a notice of deficiency. You then have 90 days (150 if addressed outside the United States) to petition the Tax Court without paying first, and the IRS cannot assess or levy for that deficiency during that period or while the case is pending. Mathematical and clerical errors are handled under a separate, faster procedure.Law · IRC §6212; §6213(a), (b)
If no petition is filed in time, the deficiency is assessed and payable on notice and demand.Law · IRC §6213(c)
You can waive those restrictions, for all or part of a deficiency, by a signed notice in writing, which allows the IRS to assess without a notice of deficiency.Law · IRC §6213(d)
The IRS generally has three years after a return is filed to assess more tax, or six years if more than 25 percent of the gross income stated on the return was omitted.Law · IRC §6501(a), (e)
Check it before you sign it.
A CP2000 proposal can be partly right and partly wrong, for example where income is counted twice or a sale is reported without its cost basis. We reconcile each item to the documents before responding, so that you agree only to what is correct and the response preserves your rights on the rest.Bridge's view · practitioner judgment
We take it from here.
- We take controlOnce you sign the authorization, we deal with the IRS for you. Send us any IRS letter you receive.
- Exactly where you standEach proposed change, matched to the forms the IRS received and your own records.
- Your deadlines, risks and leverageThe reply date, any proposed penalty, and the deadlines that would follow.
- Your Resolution RoadmapIn writing: what to agree to, what to dispute, and on what basis.