Leif Adamec Rydenfalk
The IRS sent a CP2000
A CP2000 says the income on your return doesn't match what employers, banks or brokers reported to the IRS, and proposes more tax. Nothing is owed yet and it isn't an audit. You get to agree, partly agree or disagree, and many are reduced or dropped because the IRS counted the same income twice or didn't know what you paid for a stock.
This is what I'd do, in order. I'm not a tax advisor, and if you'd rather not deal with it, send it to me.
Find the date and the mismatch
The response date is printed near the top, usually 30 days from the notice date (60 if you live abroad). Then find the table of "information we received": each line is a form someone filed under your Social Security number, a W-2, a 1099-B, a 1099-K, a 1099-INT. Compare each line with your return.
Not sure the letter is real? Check it against your account at irs.gov/account, or call the number on irs.gov, never the one in an unexpected text or email.
The usual reasons it's wrong
| Stock or crypto sales | The broker reported what you sold for but not what you paid. The IRS then taxes the whole sale. Your purchase records usually shrink it to the real gain, or a loss. |
|---|---|
| Payment apps (1099-K) | Money from friends for dinner, or selling your own used things for less than you paid, isn't income. Show what each payment was. |
| Counted twice | The same income reported on two forms, or already on your return under another line. |
| Not yours | A form under your number that you never earned: say so, and report identity theft at identitytheft.gov. |
How to answer
- Use the response form that came with it. Tick agree, partly agree or disagree and sign it. Don't file an amended return for a CP2000 unless the letter asks you to.
- If you disagree, explain each line. One short paragraph per item, with the proof attached: brokerage cost-basis statements, receipts, app histories, a corrected form from the payer.
- Send it the way the letter says, fax or mail to the address printed on it, and keep a copy plus the fax confirmation or certified-mail receipt.
- Need more time? Call the number on the notice before the date and ask. They often give extra days.
- If you agree and can't pay at once, a payment plan can be set up online at irs.gov/payments.
If you don't answer
The IRS sends a statutory notice of deficiency. From that letter you have 90 days to petition the US Tax Court, and after that the tax is assessed and collection starts. Answering the CP2000 on time is much easier than any of that. A Low Income Taxpayer Clinic or the Taxpayer Advocate Service helps for free if you qualify.
Or hand it to me
Send me the CP2000 and your records. I go through each line, write the response and the explanation, you sign and send it, and I keep track of the date and the IRS reply. You get a fixed price before I start.
