IRS Form CP2000

Did you recently receive IRS form CP 2000 in the mail?  If so, the Internal Revenue just sent you a letter telling you to pay an extra $6,500 (for example) for your 2018 taxes, plus an additional $225 in interest.  In addition to the 10-page letter, you probably also received the 8-page newsprint booklet “The Examination Process”. Let me begin by telling you, you’re not alone!

The IRS sends these Automated Reporter Under Notices (AUR), more commonly known as CP 2000 notices, throughout the year and they are as common as any other notice the IRS send out.  The CP 2000 notice is a computer generated letter sent to taxpayers that have a “mismatch.” If the information on your income tax return is different than the information reported to the IRS by third parties you may receive one of these notices.  The IRS commonly closes over 4 million of these cases per year. Like I said, you’re not alone!

As computer technology at the IRS advances, the IRS continues to send more and more of these notices in an effort to reduce the tax revenue gap.  Simply defined, the tax revenue gap is the difference between the amount of tax owed and the amount of tax paid (on time). Over the years the tax gap have fluctuated between 15% and 18% of the total tax liability.  Closing the tax gap is considered to be a major revenue source for the federal government.

What Do I Do?

So what should you do if you receive one of these notices?  First of all, don’t panic. Remember, this notice is not a bill, not yet anyways.  And it certainly is designed to look like a bill. A CP 2000 is not a correspondence audit, or an audit by mail.  At this point the IRS is simply looking for more information that was reported by a third party and there was a discrepancy on your tax return.  Nevertheless, this notice is serious. If you disregard this notice you can be assured that an actual bill for increased taxes, penalties and interest is headed your way in the foreseeable future.

The smartest thing you can do is address this notice immediately.  The IRS gives you 30 days to respond to this notice. Keep in mind that 30 days means 30 days from the date of the letter and not 30 days from when you decide to open your mail.  Responding also means when the IRS receives your correspondence, not postmarked. Of course you can call the IRS… but hold times are painstakingly long.

In some cases, the IRS is wrong.  In some instances there have been duplicate entries by third parties, in other cases the IRS computer system isn’t complicated enough to process all the information on your attached schedules.  

But what if the information is correct?  First off, see where the discrepancy lies.  Did you forget to include a W-2? It may be possible that you also had extra withholdings and that is enough to offset the added tax due.  Can an amended tax return be completed? Is it possible that you left off some additional tax deductions that can offset the additional tax the government is trying to collect.  

So What if I Owe Extra Money?

The IRS is going to request that the balance, along with possible penalties and interest, be paid in full immediately.  If you cannot afford to pay the balance in full the IRS will usually allow you to set up an installment agreement and pay the debt for up to 84 months.  If you are already on an installment agreement for a prior tax balance, that agreement will be cancelled and you will be required to establish a new payment plan including the tax debt from all years.

If you cannot afford to make monthly payments, you may be eligible to tax relief under the IRS Fresh Start tax initiative.  In some instances, the IRS may agree to settle your tax debts for less than the total amount due. For more information, visit the IRS website at www.irs.gov or speak to a licensed tax professional today.

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Your tax resolution case will be handled by trained professionals 100% of the time because every employee at Patriot Tax Professionals is licensed and admitted to practice before the IRS.  Our employees have a formal education in taxes and have passed all required examinations to practice before the IRS?  What other tax resolution firm can make that claim?  You will never speak to a “salesman” that really doesn’t know anything about tax resolution or the inner-workings of the IRS  and will tell you anything you want to hear just to get your business.  You will never have this problem at Patriot Tax Professionals.  You will have the assurance of knowing that every single person that handles your case is licensed with years of professional tax experience working on tax cases similar to yours.  Now who would you rather have work on your case, a licensed professional or a slick talking salesperson?