Understand IRS Form CP2000

Monday June 27, 2022 – Get ready Taxpayers! The IRS Notice season will soon be upon us. That means you can expect the IRS to start sending notices about taxes you owe, but also notices about taxes the IRS determines you may owe.

IRS Form CP2000 is just such a form. A CP2000 is generated by the IRS automatically when the records the IRS has received from a third party do not match the tax return of the taxpayer.

For example, a taxpayer may have negotiated a settlement with their credit card company where the credit card company has agreed to accept less than the full amount owed and forgives the balance. When this happens, the credit card company is required to file a 1099-C with the IRS and send a copy to the taxpayer.

The taxpayer is to report that forgiven debt as income on their tax return. Man taxpayers do not know the forgiven debt is taxable as income, and do not include the 1099-C when they file. Or, the taxpayer may not have received the 1099-C. In either case, the IRS will detect a mismatch.

IRS Form CP2000 documents the mismatch and asks the taxpayer to verify the IRS calculations, or object. Often, this is the first the taxpayer becomes familiar with the alleged discrepancy and the taxpayer doesn’t understand the form. So, the taxpayer does not respond.

If the taxpayer does not respond, the IRS will send IRS Form CP3219A – Notice of Deficiency – A 90 day letter. This letter explains how the amount was calculated, what to do if you agree or disagree, and how you can challenge it in U.S. Tax Court.

Attorney Steven A. Leahy helps taxpayers who owe the IRS. So, he has seen IRS Notice CP2000 before.

https://www.irs.gov/individuals/understanding-your-cp2000-notice

https://www.irs.gov/individuals/understanding-your-cp3219a-notice

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