This page provides general educational information only. It does not constitute tax, legal, or financial advice. If you received a CP2000 notice, consult a credentialed tax professional — a CPA, enrolled agent, or tax attorney — for guidance specific to your situation. IRS official CP2000 page.
What is a CP2000 notice?
A CP2000 is not a bill and not an audit notice. It is a proposed change from the Internal Revenue Service. The IRS compares the income and deductions you reported on your federal tax return with information third parties — employers, banks, brokerages, and others — reported to the IRS on forms such as W-2s and 1099s. When those figures do not match, the IRS sends a CP2000 proposing an adjustment to your tax.
The official IRS description: “The income or payment information we received from third parties, such as employers or financial institutions, doesn’t match what you reported on your tax return.” — IRS.gov, CP2000 notice page
What information is in the notice
A CP2000 notice typically contains:
- The tax year being reviewed
- The income or deduction item the IRS says differs from what you reported
- The source (payer name and EIN) that reported differently
- A proposed change to your tax, which may include interest calculated from the due date of the return (regardless of extensions) to 30 days from the date on the notice
- A recommended response window — 30 days from the date of the notice, or 60 days if you live outside the United States, for a quick resolution
- Instructions for agreeing, disagreeing, or providing additional information
Why the figures sometimes differ — and why that may not mean you owe more
There are several reasons a CP2000 is issued that do not mean the IRS is correct:
- You already reported the income correctly — the payer’s 1099 may be incorrect, or you may have reported the income under a different line.
- Offsetting basis or deductions — for investment sales, if you sold an asset, the 1099-B may show gross proceeds but you had a cost basis that reduces or eliminates the gain.
- The income was reported but reclassified — income sometimes appears on a different schedule than the IRS expects.
- A corrected form was issued after you filed — payers sometimes issue corrected 1099s after the original filing season.
The IRS explicitly states that a CP2000 is a proposed change, not a final determination. You have the right to agree, partially agree, or disagree with supporting documentation.
Official information
- Source: IRS — Understanding your CP2000 Notice
- Recommended response window: 30 days from the date of the notice, or 60 days if you live outside the United States, for a quick resolution (the notice itself states the specific deadline). Source: IRS Tax Topic 652
- Tax year: The notice applies to a specific tax year, shown on the notice
What to do when you receive a CP2000
- Read it carefully and note the response window: respond within 30 days of the date of the notice, or 60 days if you live outside the United States, for a quick resolution
- Compare the information shown in the notice with your own records and the original return
- Gather supporting documents: W-2s, 1099s, brokerage statements, and any corrected forms
- Determine whether the proposed change is correct, partially correct, or incorrect
- Respond within the response window — either agreeing with payment, disagreeing with an explanation and supporting documents, or requesting more time if needed
When professional help is appropriate: If the proposed amount is significant, if you are unsure whether the underlying income was already reported, if the notice involves investment sales with cost basis questions, or if you are considering requesting penalty abatement, a credentialed tax professional (CPA, enrolled agent, or tax attorney) can represent you before the IRS and prepare a response. Verify any California-based preparer before hiring.
Frequently asked questions
Is a CP2000 an audit?
No. The IRS classifies CP2000 as an “underreporter inquiry,” not an audit (examination). It is a computer-matching discrepancy notice. However, if your response is not received or if the underlying issue is complex, it can escalate. Source: IRS Tax Topic 652.
What if I agree I owe the tax?
You can sign and return the agreement portion of the notice with payment or a request for a payment plan. Interest continues to accrue until the balance is paid.
What if I disagree?
You can submit a written explanation along with supporting documentation to the address on the notice. The IRS will review and respond. If you still disagree after IRS review, you have the right to request a conference with the IRS Office of Appeals.
What happens if I do not respond?
The IRS will issue a Statutory Notice of Deficiency (a “90-day letter”), giving you 90 days to petition the U.S. Tax Court. If you do not respond to that either, the IRS will assess the proposed tax, penalties, and interest. Source: IRS Publication 5181.
Can penalties be abated?
The IRS may abate certain penalties for reasonable cause or for first-time penalty abatement if you meet specific criteria. This is separate from whether you owe the underlying tax. See IRS Penalty Relief.
Where can I find the official response address?
The CP2000 notice itself states the IRS address and fax number to use for your response. Use the address on your specific notice, as it may differ by IRS campus.
Not reviewed by a credentialed tax professional. Tax year applicability: general process applies across tax years; specific deadlines and amounts on any CP2000 are specific to the year shown on that notice. Official source: IRS.gov.