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Tax Audit CPA discusses IRS CP2000 Notices | Amended Taxes

CPA Wilmington NC discusses IRS CP 2000 Notices

Gary Bode, CPA: if you’d like a free consult for an IRS CP 2000 Notice, please call us at 399-2705.

Tax Audit CPAs often see IRS CP2000 Notices. Ouch, an IRS envelope arrives in the mail. Notice CP2000 starts an automated IRS Correspondence Audit.  A CP2000 Notice “proposes” changes to a past tax return. Of course the proposed changes usually include an increase in the tax due, and sometimes with suggested interest and penalties. But some CP2000 notices result in refunds. I’ll discuss possible responses to IRS Notice CP2000 including when to amend the tax return in question. Most CP2000 Notices are straightforward, but there’s broad range of circumstances involved with responding to it. Please note there are dozens of posts in this website on IRS CP2000 Notices. Just go to the top right sidebar and type CP2000 in the Forms box.

Hi, I’m Gary Bode, CPA. You may not need a tax audit CPA to handle your Notice CP2000. Here are some guidelines based on my experience. If you get uncomfortable handling it yourself consider giving us a call. We really try to help and don’t push our services. Note that CP2000 covers a lot of different circumstances but they list the “problems” found on the CP2000 and that can very revealing on how to respond.

Notice CP2000: A Low Level IRS Audit is still an Audit

A Correspondence Audit is the lowest level of IRS audit. Their computers catch a discrepancy and automatically generate a CP2000 Notice. Any IRS Audit deserves immediate attention. Usually a CP2000 Notice just catches some income item you left off the tax return. For example, your employer must send both you and the IRS copies of your W-2s. The IRS then cross correlates your tax return against these records. If you neglected to include a W-2 on the tax return, their automated systems generate a CP2000 Notice.  They call it revenue matching. A very efficient IRS system, at least sometimes.

If IRS Notice CP2000 is Correct

If the CP 2000 is correct, accepting their proposed changes satisfies the matter. Sign and return Notice CP 2000 with a check. You can usually set up an Installment Agreement, via Form 9465, to pay any money owed over time in monthly payments. Remember, the IRS will tell your State of these changes too. So be ready. I’d read the Form 9465 instructions before calling the IRS.

If IRS Notice CP 2000 is Incorrect

While the process for dealing with correct a Notice CP2000 works well, resolution of an incorrect CP2000 notice gets mired in red tape.  You must build a bulletproof response for any disagreement. With the IRS you’re sort of guilty until you can innocence.

“Remember, the IRS assumes they’re right and you must prove them wrong.”
– Gary Bode, tax audit CPA

Suggestions for a response to Notice CP 2000

  • We suggest handling the response to Notice CP 2000 in writing. Their fax numbers don’t seem to work.
    • The IRS has removed special call lines to dealing with Correspondence Audits.
    • So expect some frustration if you call the IRS.
  • Understand your Notice CP2000. What are the issues? What tax year is it for?
    • IRS Notice CP2000 instructions are in the Notice itself.
  • Read your Notice CP2000 twice. Even as a tax audit CPA I find the format odd, making it hard to read.
  • Think of your response to Notice CP2000 like a high school project to a grumpy teacher.
  • Remember Notice CP 2000 is computer generated but real Agents will look at your CP2000 response.
    • But the CP2000 lists a fictitious Agent to help evoke a need for urgency.
  • Use a concise cover letter.
    • Be polite.
    • Be humble.
    • Don’t poke the Bear.
  • Keep the response limited to the issue in Notice CP2000. Don’t open up other tax issues or widen the scope to other tax returns.
  • Get your corroborating documents arranged in a logical way.
  • Use certified post.
    • I think it’s best to walk it into the local IRS office.
  • Be ready for some annoyance. Delays in each step can lead to ever more threatening IRS notices. In my experience, most IRS Notice CP2000s generate overlapping IRS correspondence that can be frustration.
  • The IRS timeline for replying to CP2000 is generous.
    • But don’t waste valuable defense time.
    • We often request additional time to work on your case and the IRS almost always grants 8 or 9 weeks,
  • Don’t think the IRS will go away. Deal with Notice CP2000 in some way.
  • When necessary, request a real tax agent be assigned to the case. You have a right to a managerial conference.
  • Look at it from the IRS perspective. Which is skeptical. Anticipate questions the IRS may ask and proactively address them.
  • Always ask for penalty abatement if actually do owe additional tax.

“Sometimes the IRS is wrong. Sometimes they don’t have all the relevant information, like legitimate tax credits and deductions. Sometimes penalties can be abated. Sometimes amending an earlier tax return helps.” 
– Gary Bode, Notice CP2000 CPA

Guidelines on when to seek help from a Tax Audit CPA

  • There are other issues in the same tax return you don’t want the IRS to look at.
  • There are issues in other tax returns you don’t want the IRS to look at.
  • When the amount demanded by the IRS is large.
  • You don’t understand the tax issues in your Notice CP2000.
  • Your case involves complex issues.
  • You need help paying the amount due. After we check out the IRS demand, CPAs investigate whether the IRS will accept less money as payment in full. This is the well known pennies on the dollar technique; an Offer in Compromise.
  • You have un-filed tax returns.
  • Your spouse is actually responsible for the taxes. Read up on the Innocent Spouse defense.
  • You need a buffer between you and the IRS to decrease the stress level.

Amending Past Returns for an Incorrect CP 2000 via Form 1040X

Let’s say you neglected to report $1,000 of Income from a home business. Maybe because it was your first year and you never received a Form 1099-MISC. IRS Notice CP2000 proposes you pay tax, penalties and interest on the $1,000. You had the obligation to report the $1,000 as income, but didn’t. You had the right to deduct associated expenses from the $1000, but didn’t. But you still can. How? By amending the original return via Form 1040X.  Here you would claim the $1,000 of Income on Schedule C, but deduct legitimate expenses.  If it was your first year, there could even be a business loss, potentially turning the IRS demand for more taxes into a refund!

We’re a CPA firm that handles back tax cases and IRS tax audits, including CP2000 resolution. We offer a virtual CPA office to serve national and international clients. Don’t let distance dissuade you from utilizing our free phone consult. Of course, we offer a full palette of CPA services too.  Our posts should help you gauge our ability and proactive philosophy.  If you need a free initial consult, please consider calling us at (910) 399-2705.

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Here’s a cut and paste blurb on CP 2000 from the IRS website.

CP 2000 Frequently Asked Questions (FAQs)

Why did I receive this notice?

Notice CP 2000 shows proposed changes to your income tax return. This proposal is based on a comparison of the income, payments, credits, and deductions reported on your tax return with information on these items reported to us by employers, banks, businesses, and other payers. The CP 2000 also reflects any corrections we made to your original return when we processed it.

Note: If we made any changes, we would have sent you a notice at that time.

Is this a bill?

No. We’re asking you to verify the income, credits, and deductions reported on your tax return because they’re different from the information we received from other sources. We may even be proposing a decrease to your tax. The CP 2000 is only a proposal that offers you an opportunity to disagree, partially agree, or agree with the proposed changes. We haven’t charged any additional tax at this time.

Why did it take you so long to contact me about this?

Tax years generally end on Dec. 31, but we don’t receive information from employers, banks, businesses, and other payers until much later. Once we receive all the tax returns and payer information, our computer system compares the information you reported with the information the payers provided. This process is very complicated and takes a long time to complete. We’re working hard to shorten the time it takes to contact taxpayers. You may be contacted as early as 12 months from the date you file your tax return.

What do I need to do?

Review the information in the column marked “Shown on Return” and compare it with the information shown in the column marked “Reported to IRS (or Proposed by IRS).” Did you receive the income? If you received the income, was it reported on your tax return? IRS employees search the tax return and try to locate all income. Sometimes, however, several income items are combined and the employees can’t determine the source. If it wasn’t reported on your tax return, was it an oversight? If so, don’t file an amended return to report the income. Just check box “A” on the CP 2000 response page and return it with your check or money order made payable to the United States Treasury. If you agree with the increase but you can’t pay the entire balance due, you may be able to request an installment agreement. If you didn’t report the income for another reason, please explain.

I need more time to find my records and go through them all. Will you allow me additional time to respond?

It’s important that you respond to the CP 2000 by the due date shown on the notice. If you don’t, we’ll assume the proposed changes are correct and continue processing the proposal ultimately to an assessment. If you find you can’t respond by the due date on the notice because you need more time to research your records, please call the toll free number at the top of your notice. We’ll update our records to show you’ve requested an extension. Generally, we’ll allow an extension 30 days beyond the response date shown on the notice. We may also provide additional time to respond if you have unusual circumstances. It’s important to remember that additional interest and any applicable penalties will accrue on the account during the period of the extension if the tax increase is correct.

Do I have to pay the interest? Can you remove it?

The law requires us to charge interest on any tax that isn’t paid by the return due date (Internal Revenue Code Section 6601). The IRS Restructuring and Reform Act of 1998, however, requires us to notify taxpayers of the proposed discrepancies within 18 months of the original filing date in order to charge normal interest. We may need to adjust the interest charge if we make initial contact after that time.

The law allows us to reduce or remove interest on tax increases attributable to errors or delays we made in the performance of ministerial acts (Tax Reform Act or 1986 – Ministerial Act provision). A ministerial act is a procedural, mechanical, or processing act that doesn’t involve the exercise of judgment and occurs even though you did everything we required you to do. If you believe you qualify for abatement of interest based on this provision, you should include your reasons in your response.

The law doesn’t permit us to reduce or remove interest for reasonable cause. Reasonable cause only applies to penalties and refers to an acceptable explanation of circumstances that prevented you from paying the tax when it was due.

What should I do to avoid problems like this in the future?

It’s always in your best interest to keep good records of the income you receive throughout the year. By keeping records, you’ll know if you’ve received all your payment information from employers, banks, and other payers. Note that some states pay taxable unemployment benefits and report them to you on Form 1099-G, Unemployment Benefits, so be sure to keep that information as well. It’s also important to keep accurate information on any mortgage interest you’ve paid. This information is reported on Form 1098, Mortgage Interest Statement.

When you receive these documents, review them and make sure the payers have your most current address.

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98 comments to Tax Audit CPA discusses IRS CP2000 Notices | Amended Taxes

  • Dianna

    Thank you for this useful information! I have been unable to find an answer to my question on the IRS website. I need to know how much I am required to pay if I only agree with part of the proposed changes…they are saying I failed to report $84 and $1894. The $84 I will give them, because I cannot locate a 1099 and I am assuming it got thrown away with the junk mail. The $1894 however is a withdrawal from a retirement account that was rolled over. Apparently the withdrawal got reported but not the reinvestment information, which the company who handles our retirement accounts is going to provide so I can send that with my disagreement. So basically can I wait for their response to see how much I owe on the $84, or are they going to ding me for more penalties because I did not include my payment with my response?

  • Stephanie

    In filling out the insolvency worksheet, is the amount of the debt that ended up being written off included in my liabilities?

  • Martha Velasquez

    I received a CP2000 notice regarding my mortgage interest deductions. I’m listed second as the co-borrower on my 2011 1098 form but I paid the points and mortgage for the entire year. I was wondering what other documents would need to be sent in order to resolve this issue. I listed $15,011 (per the 1098 form) but the IRS indicated $0. I have bank statements that show the money was withdrawn from my account (not linked to the other borrower), should I include these as well?

    • Hi Martha: Yes I would send the bank statements. I think of these pesky IRS projects like high school assignments for a grumpy teacher. Maybe your co-borrower will give you a copy of their tax return? Hop that helps.

  • Arno

    Just received a CP2000 notice in the mail. The proposed changes seem correct but I am confused where to send the response & payment back to. The response form lists the IRS office in Holtsville, but the payment voucher gives a Cincinnati address.

  • Rosanne Vasko

    Hi,
    My signifant other received the CP2000 for the same situation as Martha for the mortgage interest deductions. My name is first on the 1098. I faxed a copy of the 1098 to the IRS, along with a brief letter and a copy of the CP2000 notice a couple of days after he received the notice and there hasn’t been a respond back. How long does that usually take? I did not think to send a copy of my tax return to show that I did not use the interest deduction as I file head of household.
    Thanks

  • Martha Velasquez

    Hello Rosanne,

    It took a bit to receive a response. They first sent me a letter saying they had received my CP2000 and it would take them an additional 30 days to review what I had sent. Luckily, thanks to everyone’s help, I received the final notice from the IRS that I owed 0.00. Here is what I sent,

    -Letter stating I paid the mortgage in full and that I was a co-borrower
    -Copy of my tax statement from the bank (my lender is Wells Fargo).
    -Copy of my tax return for the year.

    I sent my letter certified so I received a return receipt from the post office so that I had postmarked date for my records.

    Good luck with your response! Thanks again Gary for your help!

  • Diane

    Hi,

    Is it okay to respond to the IRS regarding the CP2000 I received by faxing it to the fax # listed on the form? If I send a response by mail the address listed is in Austin, TX (Stop 6692 AUSC). Will the Post Office deliver Overnight Mail to that type of address?

    Thanks!

    • I think most CPAs would mail the IRS Notice CP2000 response Diane. The IRS FAQ discuss whether to mail your Notice CP2000 response or call it in. No mention of fax was made. But if you find it can be faxed please comment back to me. A Fax could decrease turnaround time.

    • Rosanne Vasko

      I faxed a response to the CP2000 notice and I have gotten a letter back thanking me for the correspondence and stating they will let me know the result of their review of the correspondence within 60 days.

  • Felecia

    I received a CP2000 notice in the mail yesterday. I had never received a 1099-G for my unemployment income and therefore didn’t know I had to add it on my return last year. Now I find out that it indeed needing to be listed and that there was hardly enough taxes taken out of the unemployment funds and am being asked to pay upwards of $5,000!! Anything I can do to fix this?!?!? Any guidance would be helpful!!!!

  • Shannon

    Need help filing a form 982

  • Dale

    Hi, I received a CP2000 regarding 3 miscellaneous forms that my wife and I didn’t pay taxes on for the year 2012. We paid the taxes and fees on the CP2000, but a couple of months later, my wife realized that we shouldn’t have paid taxes on one of those forms, as she gave the money directly to her employer. How do we get our money back now on this overpayment. Do we need to file an amended return or should I call them regarding the CP2000 and request refund?

    Thanks, Dale

  • Chris

    Hi, I received a CP2000 because there was a difference in the total amount reported by me and the IRS. I have a small eBay business and the form (1099K) sent out by PayPal indicates GROSS but I actually reported the NET to the IRS. (PayPal takes 4% surcharge fee)

    What are my options? Do I just pay the amount owed since there was a mistake on my end and just live and learn? Or can I explain this to the IRS and send them additional documents indicating the mistake on my end?

    Thanks,

    Chris

  • Aftab

    Hi Gary
    I received CP2000 regarding retirement income. I believe it was reported twice to IRS. I want to discuss with you.
    Let me know if I can schedule a quick call. That would be great.
    My deadline is June 10th.

    Thanks
    Aftab

  • A.B.

    Due to post-office incompetency (misfiling into the wrong box) that I unfortunately lack documentation/admission of, I did not receive my CP2000 until less than a week before the due date. a) is a postmark of _due date_ sufficient, or does it need to be in their office by then? b) does agreeing with the changes on the form / paying the full amount negate any possibility of my later amending my return to get back part or all of the charge?

  • john

    Hi there,
    I received a CP2000 notice re underreported retirement income on my 2013 return. I assumed all applicable taxes were paid at that time but the CP2000 notice proposes a payment due to the IRS in the amount of $2,603. Can I simply inform the IRS that I will amend my 2013 tax return before April 2017 keeping it within the three-year limit to amend?

  • John

    Hi Gary,
    Unfortunately, I received a CP2000 and I think that it is correct. I made some silly errors on my return from 2013. The amount owed is $3633 to the IRS. I can’t pay that, so I am filing a form 9465 to make payments. I mistakenly threw out the return envelope. Do the CP2000 forms and the form 9485 go to different addresses? My form 9465 should go to Doraville GA as I live in South Carolina. Also, I have a local IRS office. Can I file my CP2000 response and form 9465 locally? Finally, given my amount, could you generally estimate what my state response would be in SC?
    Thanks so much for your consideration of my questions.

  • Bob

    Hi, I’m just confused where to send the Response form and payment to. The Response Form shows an address in Andover, MA and the payment voucher shows Fresno, CA. Which address should I use or am i Supposed to send the response and payment separately? Thanks.

  • Edward

    I received a CP2000 notice for unclaimed income for my wife. We received one W-2 from her company for an amount that matched the IRS, but then the IRS listed a second W-2 from the same company that we never received. We contacted the company and their payroll provider said they only have payment records matching the W-2 we received. I can also trace all her income for the year through her bank statements.

    Do you have suggestions on what a proper response? I am already going to dispute the payment and have asked the company to provide me with written verification that the W-2 I have on file matches their records.

    Thank you for any thoughts or information you can provide.

    • Sounds like you’ve got this covered already. All the company has to say is that this (the correct W-2) was the only one issued. However I’ve worked payroll and it’s possible the company may have mistakenly put your wife’s name with a different employee wages. Sorry you’re having trouble.

  • Hi. I received a CP2000 yesterday for my 2013 tax return. Apparently I failed to chain capital gains. The amount of the notice reports I owe $17,000. The issue I believe the amount computed is incorrect. Is it possible the amount listed on the CP2000 is incorrect?

  • I have lost my letter, so don’t have the phone number to get ahold of the irs number that was on it………….does anyone have this number? thank you

  • Ron Ellars

    Hello Gary
    I received a CP2000 today relative to third party reporting via Paypal and a business I use to have in 2013. In Sep 2013 someone got into my account (Paypal) and sold a bunch of iPhone in Sep 25 2013 I refund them right away within about two hours the same day. Paypal is required to report sales to the IRS if over 20,000 in a given year.

    They are also required to provide the seller a 1099k which they did not do, never got it. So I did not report it as income they reported approximately 29,000 for the year (2013). Given I was a victim of fraud I did not expect to have to do any income reporting for Paypal. With penalties etc the IRS says I owe them 11,000.

    I have chosen to attach a list of transactions ( Sep 25 2013) for the day it happened from Paypal, a copy of the 1099k with a statement explaining it to them. I should not have to do a Schedule C as I did not really meet the limit of 20,000 dollars. Nor an amended return. Your thoughts I’m doing it by mail.

    • You could try explaining it to them. But I’d go the local IRS first. Then a letter. Then the taxpayer advocate. If that fails, hire me I guess. Sounds like you’re in the right and have to prove that somehow Ron.

  • andy k

    hi. I received cp 2000 today for the year of 2013. I think either IRS made a mistake or my previous employer did not pay my withholding to IRS. Unfortunately, I am not in contact with previous employer anymore.
    I would like to respond by disagreeing since my withholding was fully deducted off my paychecks. I have a proper W2 and all the pay stubs for the year of 2013
    In the worst case I have to be responsible for missing amount, would IRS still let me make installment or would I simply lose this option and have to pay in full if they upheld their case? One more thing, would IRS actually call me at the contact number I write on the form? My understanding is IRS do not call, but is this case an exception? Thank you very much.

  • Wendy Zhang

    Hi Gary! My husband and I are married filing jointly. He has income but I don’t. We received a CP2000 notice in July for the year of 2013. It’s about the $2000 Education Credits ( American Opportunity and Lifetime Learning Credits). IRS said we could not have them. I was not sure whether IRS was correct or not, so I just responded and paid the $2000 plus interest due to avoid penalty and further interest. Until recently I found records showed that I paid the tuition back in December, 2012. The tuition was for my full-time graduate school. According to the instructions for Form 8863 on IRS’s website, payments made in the previous year for academic periods beginning in the first 3 months of the next year are qualified for the education credit.

    My question is, what should I do next – how can I get my money back, since I paid what I shouldn’t have to pay?

    Thank you very much.

  • thom piccolo

    so my cp2000 says i owe taxes on my wifes disability. is this even possible?

  • Todd Karutz

    Hi Gary.

    Ill try and make this quick.

    My father is retired. He receives soc. sec. benefits.(18,000 per yr) His other income is $11,500. My Mother is also retired her income is $5800/yr. He received a cp2000 letter saying he owes $2400 in taxes because he didnt claim his soc. sec.benefits. According to the IRS website, If you take half of his ss benefits and total their other income and if it is less than 35,000, he should not owe anything. Is this correct?

    • I’d have to research that. In all honesty I tested our software a year ago, like I do every year. The SS was accurate. So we’ve just trusted the program on this basic issue. Try entering it into free software and see what happens; sounds like you did it by hand Todd.

  • zaki

    Hi. I received CP2000 stating that I didn’t include 1099SA for my HSA distribution and they assumed all distributions were taxable and that I owe some $3k taxes on it. I have asked my HSA bank to produce the statement that will show all distributions were made to hospitals/doctors and were “unreimbersed qualified medical expenses”.

    I have made federal/state tax amendments and a letter of explanation. I was wondering, should I send all this in mail to the address written on CP2000 or should I separately file state/federal tax amendments as well.

    Is there anything else I need to do other than what’s listed above?

  • Jim Godfroy

    I received a 2000. Everything is incorrect. Used line 62 not 72 which ncludes estimated tax payments. Line 43 includes all income but some how the tax taken out for a W-2G was conveniently missed. I am not sure if anything from IRS is even looked at. I also spent 35 minutes waiting for someone to finally answer and they conveniently hung up. I spent another 45 minutes on phone and finally when phone started to die I had to hang up. Then the IRS wants me to send them money. Where do I send all the documentation that was already submitted via Turbo Tax that they never even looked at. The whole system is a joke including I don’t even trust the letter as it seems the return was hacked. Is there a place that you can send all the details that they were wrong to start with. Would it be the STOP 6692 AUSC Austin TX 73301-0021 where they expected check to go?

  • jim gardner

    I received a cp2000 from IRS. It states that they received a 1099 from the state for gross receipts medical. Do you know what this could possibly be? I never received any form of money from the state. Why would the state send a 1099-misc to the IRS and what would gross receipts medical be? Thank you for your help!

  • Sue

    I got a notice cp2000 about a year ago and I have been non-stop battling with the IRS since. They claim that my old boss who I worked for as a nanny filed a 1099MISC instead of a W2. I am being charged for her mistake essentially. They are adding it as additional income and taxing me heavily. I have already submitted the form to amend this, but they seem to be sending me the same letter with decreasing amounts every 4 months or so. I need it to stop. Please HELP ME.

    • Sorry Sue, doesn’t sound like a mistake. Your employer saved paying Medicare and Social Security tax for you, hence the 1099-MISC. Get your employer to prepare a W-2 for you and most of your problem disappears.

  • Dave

    Thanks for all your comments here Gary, they have been very helpful!

    My wife received a CP2000 notice very similar to Wendy Zhang (August 2015) above – It was related to the $2000 Education Credits (Lifetime Learning Credits) that she claimed for graduate school tuition paid in 2013. The IRS claimed that because the school only filled out Box 2 on the 1098-T, and the relevant box was actually Box 1, we had to prove that tuition was actually paid (not just billed) in 2013. We went through our files, and it appears that my wife paid the actual bill in December 2012 (this is when the cash was deposited), for the semester beginning Jan 1, 2013. We reached out to the school, whose bursar sent us a written note saying that the tuition cost was paid in 2013… but then she attached another document that shows the tuition payment was actually posted to their account on December 21, 2012.

    Two questions I was hoping you could help with.

    1) Does she actually owe taxes for the 2013 tax year (i.e. is the the IRS correct) since the actual physical tuition payment was made in 2012?
    2) A slight wrinkle to the story: Like Wendy, we actually sent in a payment for the full amount, BUT then we stopped the check before it was deposited, preventing it from being cashed, after we finally heard back from the Bursar and realized there was a chance might not have to pay. What is our best course of action to resolve this? Will they likely send another notice (along with higher interest/penalties) after depositing the check fails?

    Thanks so much for your insights

  • K Lemon

    Hi Dave. Received a cp2000 from IRS. The amounts in question were included on the original return. We responded to the notice and disagreed. Afterwards we amended the return due to inadvertent omission of income which had nothing to do with the CP2000. IRS has assessed accuracy related penalty. We requested relief under Qualified Amended Return. IRS denies relief because the CP2000 was sent out in advance of the amended return. Is the CP2000 considered a Notice of Examination for Qualified Amended Return purposes when the amended return is unrelated to the CP2000?

  • Jessica Matuizek

    Hello,

    I paid a CP2000 amount due of $1440 in July 2015, it was for Changes to my 2013 Form 1040. When I am filing my taxes this year do I need to add that somewhere? Am I waiting for a form from the IRS about interest/taxes paid etc?

    Thank you,
    Jessica

  • Ken Johnsen

    Hi Gary,

    My son received a CP2000 in 2015 for tax year 2013 for unreported unemployment benefits. He paid the requested amount ($490) in 2015. Where do we claim that ($490) on his 2015 federal income tax form as additional federal tax paid in 2015?

  • Deanna

    I received a CP2000 for 2014 that gave me until Jan 27th 2016 to respond. It showed 2 different amounts from the same employer reported to the IRS and only 1 was shown on return which would be the one I received and claimed, and 1 saying i made $147 for a employer that i worked from 1 day out that year and forgot all about it when i filled my return along with the fact I never got the W2 they sent out because it was sent to an old address of mine. Long story short I talked to my employer about it and she is having her account do some research on it but in the meantime she finally emailed me a corrected W2 in which I faxed over on 1/27/16 since I did not get it until 1/26/16 via email. I also mailed this to them as well. My questions are 1 do you think that will handle the matter since that’s all i was suppose to send and 2 as far as the $147 that i did not claim what do i do about that?

  • Mare

    Hi Gary,

    I received a CP2000 for income that I did not file on my 2014 tax return. I was laid off and paid severance, I did not receive my W-2 in time and didn’t file it on my taxes. However, in the CP2000, the IRS is claiming that I was self-employed. I was not a contractor, although I was paid my severance as a non-employee. I sent the IRS a letter disputing the $950 self-employment tax that they went to charge me. It has been over 30 days. I received my refund for 2015, the IRS sent me a check. Do you think that the IRS will respond to my dispute. And was I correct in my dispute? Do I have to pay self-employment tax?

    This is part of what I wrote to them, and I sent records of my severance agreement with my former employer:

    I have carefully reviewed the information provided to me in this letter, which indicates that I failed to report income related to a severance package and included a self-employment tax. My records indicate that I was not self- employed. The taxable income was for severance pay, not as an independent contractor.

    Thanks for this post, it was very helpful!

  • Charles Redman

    Hello, Gary. I have what seems like an extreme tax problem that admittedly is due to my own ignorance about what constitutes miscellaneous income. My only income is from Social Security disability and a pension. The pension is actually half of what I was to have earned because of a QDRO division from divorce.

    In 2013, my former employer sent a letter saying the company was no longer providing “executive medical insurance” to retirees. That coverage was co-insurance that closed the gap between regular insurance and the copay. The letter said that the change was necessitated by the Affordable Care Act but as a good will gesture (a significant act of generosity), they were calculating the medical expenses I might incur going forward pre-65 and would send a check for the amount. Late in 2013 I received a check for $111,000. I later learned that the amount was double the amount I expected because the company had grossed up the calculated amount to cover taxes. That should have been my clue that the payment was considered income and not, as I thought, a benefit in the way of reimbursement for medical expenses not yet incurred.

    Of course, I did not report the payment, using the above logic and also because I had not received any tax forms from my former employer. They did send a 1099-MISC to me at a former address and it was not forwarded. No excuse, I know per the IRS.

    Fast forward to December 2015 when my conscience began to eat away at me and I drafted an amended 2013 return using TurboTax software. I put in the $111,000 and also found I had the opportunity to report increased (not covered by insurance) medical expense deductions as well as additional spousal support paid due to my interpretation that the settlement I obtained in my divorce case called for a certain amount of the money I paid be attributable to back spousal support. I never filed the amended return, foolishly betting that the IRS would not detect the one-time payment but if it did would side with me that it was not income but a benefit. My unfiled amended return showed that I owed an additional $12,784 in federal taxes. Inasmuch as I could not pay that amount, I elected to not file it. Stupid decision.

    So yesterday I received the inevitable, the IRS CP2000 notice dated February 1, 2016. The language is very customer friendly, but it still says that they are proposing I pay $63,419 as a direct result of my omission of the $111,000 payment. That includes about $50,000 in actual taxes owed; the remainder is penalties and interest. In the CP2000 notice it also says something about not including some taxable SS disability income, but I checked my filed return and I did report all income as reported on my SS 1099 statement. And although it is not very relevant, this is the first time in more than 40 years of filing tax returns that I feel like I have been dishonest. At the height of my career, my gross income was in excess of $250,000, and I paid my appropriate share of income taxes. Since 2009, my gross income dropped to less than $50,000 from SS and separation/pension. The 2013 payment was an anomaly, and I now see I should have reported it on my 2013 return.

    What should I do now? Drop the amended return in the mail right away and then respond to the CP2000 notice? Or not and respond to CP2000 saying essentially what I have told you above–the falling on my sword response? And then including the amended return with my response, arguing that while I admit I should have reported the 1099-MISC as gross income, this is why I did not, but now I have with the attached amended return where I have not only reported the one-time payment but also additional allowable deductions that cut the amount of taxes I actually do owe to $12,784?

    I filed my original 2013 return on April 14, 2014, and the date of the initial CP2000 notice is February 1, 2016

    My apologies for the length of this. Thank you for your opinion.

  • I received a CP2000 form June 1, 2015 for taxes owed in 2013. I paid the IRS $1498 plus $53 in interest. In addition, I owed taxes of $227 plus interest to my state that I paid in 2015. Can I deduct these payment from my 2015 income?

  • D McKinley

    I received a CP2000 from the irs in reference to an education and the American opportunity credit. What are my options if I do not have proof of the schooling. It was a private school that I paid cash too. And he discontinued his practice January of this year. Thank you in advance

  • chrisa

    Hi Gary! First off im just going to fla out admit i goofed up in 2014, I claimed high, forgot to file, it was a crazy period. Anyway for 2015 at a MUCH better job, i went super low on claims all year, got a decent refund filed in etc.

    No refund ever comes, it clicks for me about 2014 so i expect that mail to come soon saying pay this that etc.
    I get it, insave for a bit, i call them to find out what we need to do. they confirm they are holding my 2015 refund pending seperate payment for 2014 but its getting close to them keeping the refund to pay for it. Yikes, time flies, but they email me the gov link and i pay it directly using my bank card, not a cc. ok fixed up now you would think, but its not.
    I called a week later, the lady lets me know they ended up keeping the refund anyway to handle it, but she also sees my payment, ouch she says, but no problem. She requests the overpayment be mailed out, and done deal, she was really nice.

    Few months go by, and nothing, long story short, and 60 calls and transfers later, we found out that
    A they still have my refund (both state and federal, state was requested to send them my money)
    B They still have my payment that I thought took care of it
    C theres another problem they wouldnt tell me specifics on, only that the system found something else and id get another letter soon,

    We gave up for now, im not rich and really needed that refund, but who doesnt? i messed up, but im starting to think now both the irs and me did, rare for them i hear though,

    The next letter comes, like 4 months later (today)
    It says it found more W2s reported for 2014 and had to add in yet again, a bit more money to pay to fix 2014.
    its not that much, however, MAJOR problem in it, It is listing not only the new additions it found, but its requiring payment for the initial findings I already paid MONTHS ago as well in it. making the total an insane amount. (If it was only the new w2 additions it would only be 200$ more plus interest) instead its a few thousand as if i never paid them that much already 🙁

    Im not sure where to start but i want to act fast and perhaps with tax advocates?
    If you agree to start there would I need to file an 843 to finally get my refund “after” this conis fixed you think? No one has ever told me to fill one out, i just stumbled upon it recently.

    In short, they have A my 2014 payment
    B My 2015 refund to handle 2014, even though i paid well before a tax refund garnish
    C asking for the full amount again months later, while i was already due money back before i even got this CP for overpayment

  • Elizabeth

    My son received a CP2000 and we are working on the response letter. It tells him he owes 57,000 in taxes, penalties because there was an error on his 2014 1040 reporting some income from a withdrawal from a Mutual fund account to pay for school expenses. He only made about 4500 in income that year, in addition to the withdrawal. What is the best way to respond? We will be going to an H&R Block for help in filing an amended return.

  • Tiffany

    HI Gary,
    I received a CP2000 letter stating I owed $848.00 for unreported retirement distribution. I agreed with the changes and paid the amount. I have now received a second letter stating they haven’t resolved the matter because they haven’t completed all the processing necessary to give a complete response. Said they would respond within 60 days. Is there anything else I should do?

  • Tiffany

    Received a CP2000 notice for unreported 401k disbursement. I sent in the amount owed. I just received a notice stating they received my correspondence and stated they haven’t resolved the issue sit to need for continued processing. Is this a standard letter? Is there anything else I need to do?

  • Jennyfer

    My bf is currently out of country and received the cp2000. We used taxact to file online and they walked us through all our dedictions. They said he should not have received an education credit and American opportunity credit but these were found automatically for him based on his other inputs.. I personally don’t see what’s wrong wit him 4eceiving the credits that the program gave him. Is there something I am overlooking?

  • rose

    I received a cp2000 notice for a capitol one credit card that was written off in 2000 irs saying because I didn’t report this I owe do I really have to pay this?

  • Calvin Cannon

    Hi Gary,
    MY wife and I received a notice CP2000 in June of 2016 declaring under reported income for the tax year 2014. This income was received as a result of a mediation of my father in laws estate which he left to his “best friend” . My wife filed a caveat against the will and after a 2 year period of being in and out of court the parties accepted mediation and my wife received $22,500 from the estate which was immediately consumed by the lawyer fees and repayment of the credit card used to fund the case.
    The opposing party who became the executor of the estate later sent a form 1099-Misc at tax time. That year we used a CPA local to us who was highly recommended. He obviously screwed up handling our return by claiming we had received 10,000 each as a gift and claimed the leftover 2,500 as income. When presented with the CP2000 notice , he immediately had us write up a letter explaining the circumstances involved in the receipt of this money and supposedly sent it off.Surprise,surprise we received another notice a month later stating we still owed the money, the CPA once again requested more information to send the IRS. Another notice, this one adding penalties. I called the IRS myself and confirmed that no communication had been filed on my attempt. The agent I talked to gave me a fax number to fax my info to. I called a week later and found that the number he had given me was incorrect and was given the correct number. I faxed the info again that day and have not had a chance to re contact them due to the holidays. I also mailed a copy of the information to PO Box 16336 Philadelphia PA 19114-6336 and received the letter back as not deliverable.

    What do I do now? I read up above that the fax numbers are useless so HOW do I proceed? This has been a nightmare as i don’t have the $5245 they want in unpaid taxes and don’t feel as that it should be owed since my wife received it as a disbursement from her fathers estate.

  • Mavin Jones

    I received a CP2000 for taxes owed in 2015. The IRS claims I am not eligible for education credits received on my return. My tuition was waived/paid from the grant fellowship I was awarded. But the TurboTax software says I should put the amount paid as tuition even if it was from a grant, which I did. My school did not give me a 1098T, How do I respond to the IRS?

  • Michael S

    Does the money taken out of a 529 have to be spent immediately or is it just for any eligible college expenses during the same tax year? Got a CP2000 claiming I must pay on the earnings from a 529. The money was taken out in June. The total was about 50% of college expenses in the same tax year. If I just count tuition from January and August of that year, the 529 covers about 80% of that cost. I know tuition is an eligible expense. I have found conflicting opinions on dining plans, housing, books, fees and computers. So I would rather respond to the CP2000 that I am only claiming tuition since that simplifies matters. They actually calculated a 62% tax rate on the earnings! But that’s a different issue.

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