If you have received a CP 2000 Notice from the IRS, you may be wondering what it means and whether you are being audited or you could be in trouble. We will address all of these questions today in this blog post.
First of all, a CP 2000 Notice is a letter that the IRS sends to taxpayers after its “automated underreporter” system locates what is believed to be a discrepancy on a tax return. The system is set up to compare the information submitted on documents like W-2s or 1099s with the information submitted on tax returns.
When a potential discrepancy is found, the IRS notifies that taxpayer that they could be entitled to a larger return, or they could owe additional taxes. Often, a letter stating the latter sends people into a panic. However, the best thing to do is stay calm.
A CP 2000 Notice does not mean that you are going to be audited -- though this could end up happening -- and it doesn’t mean that you are in trouble. Whether you think the notice was sent in error or you know exactly why it was sent, the important thing to do is to act quickly.
An experienced tax attorney can help you get to the bottom of the situation. If the alleged discrepancy is a mistake, your lawyer can help you show the IRS why that is. If you know that you owe additional taxes that you can’t afford to pay right now, your lawyer can help you work out a plan with the IRS.
There are two mistakes that you can make after receiving a CP 2000 Notice. One is ignoring the notice, which will only make the situation worse. The other is calling one of those debt relief companies that promise to settle your tax debt with the IRS.
As this article from the Washington Post explains, these so-called tax-relief companies often charge hefty fees for promises they never deliver on.