The CP2000 Notice is sent when:

• The IRS compares your tax return to information from payers, banks, or other sources
• They find unreported or underreported income
• The notice proposes changes to your tax return and a balance due if you owe additional tax
• This is not a bill but a proposal to adjust your tax liability
• You have the right to agree or disagree with the proposed changes

Common causes include:

Missing Documents

• Missing W-2s, 1099s, or other income documents on your return
• Failure to report income from all sources
• Oversight in reporting side income or freelance work

Reporting Errors

• Reporting incorrect amounts of income
• Errors in reporting dividends, interest, or self-employment income
• Mathematical errors in tax calculations

Discrepancies in Records

• Difference between what you reported and what employers/banks reported to IRS
• Incorrect taxpayer identification information
• Misclassified income types

Step 1: Review the Notice Thoroughly
Compare the IRS's income information with your tax return and records.

Step 2: Agree or Disagree

• If you agree, sign the response and pay the amount due
• If you disagree, gather proof and explain why the IRS's proposed changes are incorrect
• Consider professional help for complex situations

Step 3: Respond Within the Deadline
You generally have 30 days from the notice date to respond to avoid penalties.

Step 4: Keep Detailed Records
Maintain copies of all correspondence and documents sent to the IRS.

Negative Consequences

• The IRS will assess additional tax, penalties, and interest
• Collection actions could be initiated against you
• You may lose the opportunity to dispute the proposed changes
• Your tax debt could grow significantly with penalties and interest

Long-Term Impact

• Potential damage to your credit score
• Possible wage garnishment or bank levies
• Difficulty obtaining loans or mortgages
• Increased scrutiny on future tax returns

Proactive Measures

• Report all income accurately from all sources
• Keep thorough records of all income documents
• Use reliable tax preparers or software
• Double-check all numbers before filing your return

Organization Strategies

• Create a filing system for your tax documents
• Keep copies of all filed returns and supporting documents
• Reconcile your records with year-end statements
• Review your tax return against previous years for consistency