IRS Examination and Appeals

CP2000 Notice Response

A CP2000 is not a bill and it is not an audit. It is the IRS telling you that what a third party reported about you does not match what you put on your return, and proposing to change the return accordingly. It comes with a deadline and with the right to disagree.

Also called: CP2000, CP2000 notice, underreporter notice, IRS says I did not report income.

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Where these come from

The IRS matches your return against the forms filed about you by employers, banks, brokers, and payment processors. When something does not line up, the system generates a proposed change automatically. No person has reviewed your circumstances at that point.

That is why so many are wrong. Securities sales are a classic case, where the notice counts the whole proceeds as income because the cost basis was never reported to the IRS. Duplicate reporting, income belonging to someone else, and amounts already reported on a different line are all common.

How to answer it

You can agree, agree in part, or disagree, and the response window is short, commonly 30 days from the date on the notice. A disagreement needs to be supported with documents rather than asserted.

Do not file an amended return as your response unless you have been told to. It usually confuses the matching process and delays resolution. The notice has its own reply mechanism and it should be used.

This is likely relevant to you if

You received a CP2000 proposing additional tax
The notice counts stock or crypto sale proceeds as though there were no cost
Income listed on the notice belongs to someone else or was already reported
You agree something was missed but the proposed amount looks too high

Professionals who handle CP2000 Notice Response

Certified Taxpayer Representative^™ holders are listed first, then by membership level. Every listing is a licensed professional reviewed by hand before it appears.

CTR^™Certified Taxpayer Representative^™, Verified

Dan Henn, CPA, CTR™

Daniel Henn, CPA, PA

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Rockledge, FL

IRS Power of Attorney Representation (Form 2848)
Installment Agreement Negotiation
Currently Not Collectible Status
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Aims to reply within 24 to 48 hours

Accepting clients

National

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Common questions

Is a CP2000 an audit?

No. It is an automated matching notice proposing a change. It can turn into an examination if it is not resolved, but on arrival it is a proposal you have the right to dispute.

What if I miss the deadline?

The IRS generally moves to assess the proposed amount, and you receive a notice of deficiency giving you a further, strictly limited window to petition the Tax Court. Options narrow considerably after that.

Why is the amount so much higher than the profit I made?

Most often because only the gross proceeds of a sale were reported to the IRS and your cost was not. Supplying the basis documentation usually reduces the proposed change substantially.

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This page is general information about how the IRS handles this kind of matter. It is not advice about your situation, and no outcome is being promised. Results depend on your own facts. Speak to a licensed professional before you act. The directory is a free member benefit of Tax Resolution Academy^®, and there is no way to pay for a higher position in it.