What in the world is a CP 2000? Form CP 2000 is used to inform taxpayers of a change or changes made to your income tax return. This is based on the comparison of the income, payments, credits, and deductions reported on your tax return with items reported to the IRS by banks, employers, businesses and other payers. The form may also reflect any corrections made to your original return when it was processed.
Because of the cycles of processing information at the IRS and the October 15th extended filing date, the IRS tends to send out a batch of CP 2000s during the month of October. Do not panic if you receive one of these forms in your mailbox! The CP 2000 is not a bill, but a statement letting you know the IRS has found information which is different than what you submitted on your tax return. The IRS wants you to verify the information – chances are you might even be owed money.
What should you do if you receive a CP 2000? Compare the information in the “shown on return” column with the information in the “reported to the IRS” column. Did you receive the reported income? Did you report it on you income tax return? If you inadvertently left the income off of your return, you do not need to file an amended tax return. You may check box A and return the form with your check our money order for the amount of tax owed. If you agree with the balance owed but cannot pay, you may be able to set up an installment agreement with the IRS. If you do not feel comfortable dealing with the balance owed, contact JK Harris for a free consultation. We can assist you with the options available to you.
It is very important you respond to the CP 2000 by the date listed on the form. If you do not deal with the form, the IRS will assume the balance due is correct and they will begin assessing interest and penalties against you. If you need more time to research the discrepancy, call the number on the form to request an extension.
To avoid problems in the future or to insure you can easily dispute these issues in the future, see our blog on good record keeping. Keeping track of all tax related documents will keep you prepared for each tax season and will assist you in researching any disputes, should they arise.