Things to do if you receive an IRS CP2000 warning

An IRS CP2000 warning is sent to the taxpayer when the income reported by third-party sources, such as an employer, a bank, or a mortgage company, does not match the income reported in the tax return.

This is not a tax bill or a formal audit notification; it merely informs you about the information received by the IRS and its impact on your tax. However, it is essential to pay attention to the CP2000's warning, as interest accrues on the unpaid balance until it is fully paid.

If you receive a CP2000 notification by mail, please complete the response form. If your notification does not contain a response form, follow the instructions there. Ordinarily, you are to respond within 30 days of the date printed on the alert. You may take longer to respond, and if you cannot pay the full amount, you can choose to set up a payment plan that is conducive for you with the IRS.

If the information in the CP2000 Alert is incorrect, refer to the Alert Response Form for instructions. You can contact the person who provided the information and request a correction.

How to respond to a CP2000 alert

Assess your situation and decide on the correct response.

Start by checking that you owe more taxes. To do this, you have to establish whether the income in question was correctly reported in the tax return. Here's how:

• Collect all the information under your social security number. These are the tax forms you receive and report your income for the year (such as W-2 and 1099s). Compare these returns with your tax return to see if you have any income left on your tax return.
• In this case, you must correctly calculate any additional costs you may have. Note that you may have other deductions that affect the calculation of the new tax.
• Determine whether you accept, in part or not, the CP2000 warning.

Respond to the IRS

• If you agree with the warning, send the CP2000 Response Form to the IRS with payment (if applicable). If you are not capable of paying the full amount, you can request a payment agreement with your CP2000 response.
• If you agree or disagree with CP2000, you must complete and send a response to the IRS with supporting documentation. You can attach a correct statement to clarify your position, but do not submit an amended return. If the IRS accepts your explanation, the IRS will correct your return.
• It is also possible to approach any proposed sanctions in response to the under reporter notification.
• If the IRS refuses your response, consider appealing.
• Prevent future registrations and associated penalties.
• After about eight weeks, call the IRS or check the transcripts to confirm that the IRS has solved the problem.
• To avoid penalties for more recent statements, refer to the reports to determine if the same mistake was made in other years. If necessary, you can submit an amended return in those years to avoid an additional 20% penalty in terms of accuracy.

For future returns, collect all information before submitting it. You can request for your information statements from the IRS. Please note that pay and income transcripts do not contain all W-2 and 1099 forms until the end of May.

How to avoid receiving a CP2000 IR2 alert

• Keep accurate and detailed records.
• Wait to accept all tax returns before submitting the tax return.
• Check the files you receive from your employer, mortgage company, bank, or any other source of income (W-2, 1098, 1099, etc.) to make sure they are correct.
• Include all of your income on your income tax return, including those from a second job or current economic rates (for example, renting a free ride on Uber).
• Follow the guidance on how to properly report income, expenses, and deductions.
• Submit an amended income tax return for any information received after filing the income tax return.
• Use a tax preparer to help you avoid mistakes and find credits and deductions you can claim.

If you have questions about IRS notifications, help is just a phone call.