IRS CP2000 Letter FAQ

The IRS CP2000 letter provides notice of a discrepancy between what was reported to the IRS and your return. It also threatens changes to your return based on that discrepancy.

The IRS can issue a CP2000 letter for 3 years of returns based on the dates those returns were due to be filed or filed, whichever one came later.

Yes, the CP2000 can “morph” into an audit in certain situations. The taxpayer can request that it be treated as an audit as well.

Ignoring the IRS CP2000 would be a mistake unless you are certain that the changes the IRS is proposing to the return are correct.

Yes. When the CP2000 process is final and a bill is issued, you will want to determine whether you should pay it in full, or use a collection alternative.

If the new debt is incorrect, you can ask the IRS to “re-consider” the assessment.

Yes. you will want to ensure you qualify for first-time penalty abatement or reasonable cause penalty and ask that the penalty(ies) not be assessed.

The IRS typically sends the CP2501 notice first for a few different reasons.

It will depend on the outcome. The outcome of the CP2000 process will either be new debt or no change.

You should create a return for the purposes of comparing the correct return to the IRS proposed changes. But filing the return as an amended return in response may cause more problems.

There are a specific set of steps that should be followed in responding to an IRS CP2000 letter.