Getting any notice from the IRS can send you into a tailspin. The feeling of dread starts when you see the return address on the envelope. First things first… sit down and take a deep breath! After that initial wave of panic subsides, it’s a good idea to open the notice and see what the IRS is sending you.

You may feel better knowing that the IRS sends millions of notices each year (by their own admission). Most of them are also generated automatically. So there’s no reason to be scared out of your wits.

You will get through this!

How Do I Know I Got a CP2000 Notice?

In the upper right-hand corner on the first page of the notice, it will tell you that it is a CP2000.

What is a CP2000 Notice?

Scary envelope aside, it is not a bill for taxes due, no matter how it looks at first glance. That’s the good news.

If you receive a CP2000 notice, it basically means that there is a mismatch. The income information that the IRS has on file doesn’t match what was reported on the tax return. The IRS assumes what they have is correct, so they are sending you this notice.

This can change the amount of tax you owe: You may owe more tax or that you may be entitled to a refund.

Why are You Getting a CP2000 Notice?

Each year, businesses and institutions send information to the IRS.

Employers have to send you a W-2, which reports taxable wages paid to you. Business owners must also file a Form-1099-MISC to each person they have collected at least $600 in rents, services, prizes and other income.

So if you have been paid any of these, the IRS already knows it… before you file your return.

The deadline for businesses to send these forms to you is the end of January. Using your social security number, the IRS matches that information with what you report on your tax return.

One of the most common reasons for receiving a CP2000 is omitting an amount from a 1099 when reporting your income. This can be side income, rental income, or even interest or dividends.

The CP2000 Notice: Presumed Correct

What the IRS receives from businesses takes a higher precedence than your tax return. Therefore, when you receive this notice, it will show you what your new tax is, based on the information received from all of these businesses.

So Now What?

You have two options. You can either pay the new amount as indicated on the notice, or you can dispute it.

If You Choose to Dispute the CP2000 Notice

If you disagree with the IRS finding, or if you can’t pay the amount they are asking for, an Enrolled Agent will navigate through the process on your behalf.

If you do owe the tax, interest, and penalties will be assessed on the balance due, which can make it harder to pay off all at once.

Depending on the amount of tax, the penalty amount can really add up. However, there are ways to have that penalty removed or abated. An EA is the best choice if you are interested in fighting those penalties.

Don’t lose sleep over receiving a CP2000 notice. You do need to take action, however. Call our office today to set an appointment or book one online now.

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Jeffrey Schneider, EA, CTRS, NTPI Fellow has the knowledge and expertise to help you reach a favorable outcome with the IRS. He is the head honcho at SFS Tax & Accounting Services as well as the Enrolled Agent and Certified Tax Resolution Specialist for SFS Tax Problem Solutions.
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Now What? I Got A Tax Notice From The IRS. Help! Defining and deconstructing the scary and confusing letters that land in your mailbox. Jeff defines and deconstructs the scary and confusing letters in a fashion that mixes attention to detail with humor and an intricate clarification of what is what in the world of the IRS.

The book is available in paperback and ebook on https://Amazon.com
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For more on SFS Tax Problem Solutions, visit: http://sfstaxproblemsolutions.com/
For more on SFS Tax & Accounting Services, visit http://sfstaxacct.com/
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