Receiving a CP2000 notice from the IRS can be unsettling, but it’s not an audit and doesn’t necessarily mean you did anything wrong. This notice simply means the IRS found a difference between the income reported on your tax return and what third parties—like banks, employers, or brokers—reported to them. It’s a proposal, not a bill, and you have the chance to respond before any changes are made to your tax liability.
The CP2000 typically arises when income is accidentally left off your return. This can happen if you forgot to include a 1099 for freelance work, missed a small dividend, or didn’t report a stock sale properly. Sometimes, it’s due to a mismatch in reporting by a financial institution. The IRS outlines what they received versus what you reported, then calculates the difference in tax owed, along with any applicable penalties or interest.
Start by reading the notice thoroughly. It will list the sources of income in question and show how the IRS arrived at the proposed change. Compare the IRS’s information with your own tax return and income documents. Did you miss a 1099? Did you enter a wrong number somewhere? Are the amounts the IRS lists actually accurate?
Once you’ve reviewed everything, you’ll need to decide how to respond. If you agree with the IRS’s findings, you simply sign the response page, return it, and pay any additional tax. If you disagree with part or all of the notice, you’ll need to send a written explanation along with any documentation that supports your case—like corrected 1099s, brokerage statements, or payroll records.
The IRS generally gives you 30 days to respond, so don’t put it off. If you need more time, you can usually request an extension by calling the number on the notice. The response must be mailed or faxed to the address provided; replying online isn’t currently an option for CP2000 notices.
