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Sections of the CP 2000
Steps for Reconciling the Return to the Notice
Sample CP 2000
IRS Notice CP 2000 is referred to as the Notice of Proposed Adjustment for Underpayment/Overpayment and is the most common notice sent out by the IRS. The IRS compares informational returns filed by companies on Forms W-2, 1098, 1099, etc. with information as reported by the taxpayer on their return, and issues a CP 2000 if they find differences in income, deductions, credits, and/or payments.
Sections of the CP 2000:
- Header Section
This area contains the Notice Number, the applicable tax year, the notice date, your Social Security Number, and the IRS contact number.
- Summary Section
The Summary Section of the CP 2000 provides a brief summary of the additional tax due and the steps you should take to understand the notice.
- Frequently Asked Questions
This page provides answers to the most commonly asked questions. For example, if you do not think you will be able to respond by the due date (generally 30 days from the date of the notice), you may call the IRS to request an extension of time. However, please note, interest and penalties will continue to accumulate during the extension period.
- Response Section
The Response Section of the CP 2000 is where you can indicate whether you agree or disagree with the proposed changes and submit additional information to the IRS. This page (or a copy of this page) should be attached to any response sent to the IRS. There may be a Response Form for when a payment is going to be enclosed and a different Response Form for when no payment will be enclosed.
You will, of course, want to review the Explanation Section first before filling out the Response Forms. Note: You can also choose to authorize someone other than yourself to discuss and provide information to the IRS pertaining to the proposed changes.
- Explanation Section
Within the Explanation Section, there are three sub-sections: (1) Information Reported to IRS that differs from the amounts shown on your return which generally starts on Page 5, (2) Reasons for the changes which provides a general overview of why the IRS is proposing the change, (3) Changes to your return which has a table with the following columns to help you understand how the adjusted tax amount was calculated: Shown on Return, Reported to IRS or as corrected, and Difference.
Steps for reconciling the return to the notice:
- Go to the "Changes to Your Return" section which is generally located on one of the last pages of the CP 2000. First, you will want to verify that the figures under the "Shown on Return" column match the figures on your copy of the originally filed tax return.
- Next, you will want to review the "Information Reported to IRS that differs from the amounts shown on your return" section which is generally located on Page 5 of the CP 2000. Compare the form information listed here with the tax documents you received for the tax year in question. If you never received or no longer have a copy of the tax document(s) outlined within this section, you will need to contact the employer, financial institution, or other issuer to obtain another copy.
- Sign back in to the applicable year’s TaxAct® Online return (or open the applicable year’s TaxAct Desktop return). Navigate to the specific section(s) of the Federal Q&A to review your entries for the form(s) in question.
- Navigation to the most common forms are listed below for your convenience:
Ø Form 1099-R
Ø Form W-2
Ø Form 1099-MISC
Ø Form 1099-INT and Form 1099-DIV
Ø Form 1099-B
Ø Form 1099-G
- Review the number of tax documents entered on the Summary screen for each specific form. Are all of the forms entered?
- If you verify all the forms were entered, click Review next to the form in question to review your entries.
Ø Was the information entered correctly?
o If not, continue with Step #4 to reconcile the return.
o Conversely, if you have verified the information was entered correctly, you will need to
contact the IRS to determine where the discrepancy lies.
- If you notice a form was not entered, continue with Step #4 to reconcile the return.
- In order to reconcile the return with the proposed changes outlined on the notice, you will need to correct your entries by adding or modifying the information. If you have not done so already, please be sure to print a copy of your originally filed tax return before making any changes.
- The return should now reconcile to the column "Reported to IRS or as corrected" under the "Changes to your Return" section.
- Note: Generally, when an IRS notice is received, the IRS prefers you do NOT file an amended return. Depending on your response (agree, disagree, or partially disagree), the IRS will update their records accordingly. You simply need to print a revised return for your own records.
- Print a copy of the revised return:
Ø Printing Your Return – TaxAct Online
Ø Printing Your Return and Individual Forms – TaxAct Desktop
- You can now respond to the IRS notice using the Response Forms starting on Page 3. Before mailing your response to the IRS, make a copy of the entire correspondence for your records.
- AGREE: If you agree with the proposed changes, sign the Response Form and return it in the enclosed envelope along with your payment.
Note: If you are unable to pay the full balance due, you can make a partial payment or you may request a payment arrangement to pay the amount you owe the IRS in installments. If you wish to pay in installments, you will need to complete and return the installment request form enclosed with the notice and return it with your Response Forms. The IRS will contact you later with payment information. If an installment agreement is approved, you will be charged a one-time fee.
- DISAGREE: If you disagree (wholly or partially), DO NOT SIGN THE NOTICE. Instead, check Option 2 or 3 on the Response Form and explain why you do not agree in a signed statement. Attach the statement and supporting documentation to the Response Forms and send it to the IRS within 30 days from the date of notice.
Include your phone number (with the area code) and the best time of day to call. Be sure to write your last name, SSN and the tax year on each page you’re attaching to the response forms. Before mailing your response to the IRS, make a copy of the entire correspondence for your records. If possible, it is suggested you send the response through Certified Mail with Return Receipt requested. The IRS will then review the information and either reverse the proposed changes or forward your case for audit.
Sample CP 2000: