Updated: October 28, 2025

By: Kari Brummond, EA|Reviewed by: Charles P. Corsello, EA

IRS CP2000 Notice – What It Means & What To Do

IRS CP2000 Notice

Your day was going just fine until you got home from work, checked your mail, and found the IRS sent you a CP2000 notice containing a “proposed amount due.” Mail from the IRS is almost never good, but this is one of the few cases where it might be. Let's dive into what it is, what it means, and your options from here.

What is a CP2000 notice?

An IRS CP2000 notice is automatically triggered and sent by a computerized system when the amount you report on your tax return does not match the information the IRS receives from other sources such as your employer, bank, and other third parties (shown on IRS wage and Income transcript). The IRS matches returns with information from third parties normally after the original return due date.

In fact, the IRS sends over 6 million CP2000 notices yearly. This notice informs you of the discrepancy and proposes a change to your tax payments or credits and gives you an opportunity to respond. You may or may not agree with the IRS, but you must respond to avoid penalties and interest.

Don’t panic. You may not owe anything at all. For example, what if you took a ROTH distribution but did not report it? Maybe you had a cancellation of liability (1099-C) you did not report but you are insolvent and can prove that.

An IRS CP2000 notice is not a bill, and it’s not an audit notice. Theoretically, it could address either an overpayment or an underpayment, but of course, it is the underpayments that concern us the most. If there is a discrepancy, it could be caused by an error by you, a third party, or even the IRS computer system. In many cases, a CP2000 notice happens because the tax preparer forgot to include the income, the client of the tax preparer didn’t provide the income document (.e.g. 1099), or the taxpayer moved and did not get the document.

Stephen A. Weisberg, Tax Attorney underscores how misunderstanding a CP2000 notice can lead to costly mistakes.

“Many taxpayers think a CP2000 notice is an audit. It’s not. It’s an automated notice showing that income reported to the IRS doesn’t match what was reported on the return. The biggest misconception is assuming it’s wrong or can be ignored. Responding quickly—with documentation to explain or correct the difference—is key.”

IRS CP2000 Notice | What is a CP2000 Notice

What to Do When You Receive a CP2000 Notice from the IRS

Read the notice carefully and determine if you agree with the IRS calculation and then respond. Usually, the IRS will include a response form. If they do not include a response firm, they will include instructions on what you should do. Either way, you must respond within the time the notice indicates, usually 30 days from the date of the letter (not the date you received it) or 60 days if you were out of the country. That means the response must be delivered to the IRS within 30 days, it does not mean you have 30 days to mail it. If you can’t meet the deadline, call the number on the notice to ask for additional time to send a response. If you do not respond, the IRS will send out letter 3219A Notice of Deficiency.

James Cha, CPA, CTRS highlights the procedural misunderstandings that can cost taxpayers appeal rights.

“The primary misconception is that the CP2000, generated by the Automated Underreporter (AUR) program, is an automatic, legally final assessment or an unchallengeable audit... In reality, the CP2000 is merely a proposal of adjustment due to a discrepancy detected by matching third-party reports (Forms 1099, W-2, etc.) against the filed return.”

“A key procedural danger is that the CP2000 serves as a 'combination' letter—it is both the initial contact and a statutory 30-day letter. If taxpayers do not respond or fail to explicitly request an appeal, they lose access to the IRS Appeals Office and may be forced to contest the issue in Tax Court.”

“The ultimate risk is that taxpayers, believing the problem is simple, lose their rights to negotiation and prepayment appeal, facing an immediate assessment or the daunting task of petitioning Tax Court.”

Real CP2000 Case Studies: How Tax Pros Resolved Notices Successfully

CP2000 notices can feel intimidating, but with the right approach, they can often be resolved without penalties or audits. Here are two real-life examples of tax professionals helping clients navigate and successfully challenge CP2000 notices.

Stephen A. Weisberg, Tax Attorney helped a freelance designer overturn a CP2000 triggered by misreported income.

“A few years ago, I represented a freelance graphic designer who received a CP2000 notice claiming she had underreported more than $85,000 in income. According to the IRS, several 1099s had been issued in her name that weren’t reflected on her tax return. She panicked—thinking she was about to be hit with a massive bill plus penalties. But when we reviewed her records, things didn't add up.”

“Two of those 1099s belonged to a company she’d subcontracted for. The payments were issued under her Social Security number instead of the company’s EIN—a common bookkeeping mix-up. The IRS’s automated system had no way to recognize that those payments were already included in the business’s gross receipts.”

“We drafted a detailed response letter explaining the discrepancy, supported by her general ledger, copies of the 1099s, and proof that the income had already been reported elsewhere. The key was keeping the explanation short, factual, and backed by clear documentation—not emotion or speculation. After about six weeks, the IRS agreed with our position and reversed the proposed changes in full. No additional tax, no penalties, no audit.”

James Cha, CPA, CTRS successfully challenged a CP2000 triggered by missing cost basis on stock sales.

“The client received a CP2000 notice proposing a significant tax deficiency, penalties, and interest. The IRS's Automated Underreporter (AUR) program had detected a discrepancy: the gross proceeds from stock sales reported on Form 1099-B did not match the income reported on the client’s return.”

“We obtained IRS wage and income transcripts to confirm the third-party reporting. The client had properly reported the sales with cost basis on Schedule D and Form 8949—resulting in a low net gain that the AUR system had missed.”

“We submitted a response packet (not a 1040X), including a detailed cover letter, Schedule D and Form 8949 pages, and an explicit appeal request to preserve rights. The AUR unit reviewed the evidence, accepted our explanation, and reversed the proposed deficiency and penalties. No audit. No appeal needed.”

Key Takeaways

Understanding the CP2000 Notice: The CP2000 is simply to indicate a mismatch between your tax return and data from third parties. This could be an underpayment or overpayment, but essentially, the key point is to notify you of the discrepancy to start the process of resolving it.
Response Strategy: It's crucial to review your records and decide whether to agree with or dispute the IRS's adjustments. Whether you agree or disagree with their decision, there are steps to be taken in either case.
Next Steps After Responding: The IRS may require additional information or adjust your tax liability based on your response. You usually won't need to file another return, instead just agreeing or disagreeing with the given response and going from there.
Consulting a Tax Professional: If the notice's implications are complex or significant, professional advice is recommended, and a tax professional should be the one to give you this advice.

What Documents You'll Need to Assess Agreement

To ensure you’re properly equipped for your tax professional appointment or your call with the IRS, these are the documents that will help you make your case.

Copy of IRS Notice
Any Materials Already Sent to the IRS
The Tax Return Being Disputed
Tax Returns From Prior Year and Following Year
Relevant Deductions or Expenses Related to the Item
Previous CP2000 Notices

How to Determine Whether You Agree with the CP2000 Notice

You will want to double-check your financial activity for the year cited before you conclude whether the figure on the notice is correct.

As always with tax matters, collect and organize relevant documents including pertinent past tax returns, your W-2s, and your 1099s. Did you forget to include any income? Are your credits and deductions accurate?
You may want to order a transcript of your return from the IRS by following instructions on the IRS website or calling 800-908-9946. You can obtain a copy of your return by completing and sending Form 4506-T, Request for Transcript of Tax Return to the IRS. Alternatively, you can have a licensed tax professional using this site to do this for you.
If the information you initially used to determine your taxes is different from what you come up with after reviewing your documents, you or your tax preparer should calculate your taxes to see if the tax due amount listed on the CP2000 is correct.

What to Do if You Agree with the CP2000 Notice

If you agree with the notice, check the box indicating agreement, sign the form and send your response to the IRS with payment (if applicable) using the envelope the IRS provides.
If a form was not included, follow the instructions on the notice.
Alternatively, you can fax the completed form to the number indicated in the notice. If you choose to fax, include your name, social security number, and tax year on each page.
If you are married and filed jointly, both you and your spouse must sign the notice.

What to Do if You Agree but Cannot Pay the Entire Amount

You may agree with the amount indicated on the IRS CP2000 notice but find you are unable to pay. Penalties and interest will likely keep growing if you do not pay immediately. However, you have options. If the amount you owe is a large one, you may want to discuss the following options with a tax professional.

Request a monthly installment agreement
- Send a completed Form 9465, Installment Agreement Request when you send your response to the CP2000 Notice or
- Visit the IRS website to learn how to apply online for a payment plan.
Request Currently Not Collectible Status if you are unable to pay the IRS anything currently. The IRS will revisit this later to see if your financial situation has changed. Interest will continue to accrue
Seek an agreement that permits you to pay less than you owe either in a lump sum payment or in monthly payments. The application for such an agreement is called an Offer in Compromise. The IRS may accept an Offer in Compromise if they think the amount you suggest is the most they can hope to collect within a reasonable amount of time. Most Offers in Compromise are rejected, but if you would like to pursue this option, you will vastly improve your chances of acceptance by consulting an experienced tax professional who can advise you if you qualify and how much to offer.

Disagree or Partially Agree

If you disagree (even partially) with the CP2000 notice, check the “I do not agree” box on the response form, sign it, and send it back to the IRS with documentation supporting your position. Send photocopies rather than originals. The more thorough you are, the more likely you will be to persuade the IRS.
You may send the response in the envelope provided or a larger envelope. The notice will also give you a fax number. If you choose to fax your response, include your name, social security number, and tax year on each page.
Contact the IRS or your tax professional if you have any questions. You will find the correct IRS contact information on the notice.
If you believe a business or person has inaccurately reported information that affects your taxes, contact them immediately and ask them to send a corrected statement. Include a copy (hang onto the original) with your response to the IRS.
You may include a corrected return with your response if you think it will help explain your position. However, do not file an amended return. More on that in a moment.
Your notice may indicate that you owe penalties. You can argue against this in your response as well.
If you are married and filed jointly, both you and your spouse must sign the notice.

In addition to these steps, the IRS recommends that you

Check your other returns to see if they contain the same mistake (assuming there was a mistake).
Keep a copy of the notice for your files.
If you would like your tax professional or someone else to help you with this notice, complete section 3 (authorization) on the response form to authorize your representative to deal with the IRS on your behalf. You can also use Form 2848, Power of Attorney, and Declaration of Representative.
Correct the copy of your tax return that you kept for your records.

When you disagree with a CP2000 notice, it's important to clearly express your disagreement, provide thorough supporting documentation, and ensure all communication includes necessary identification details. Engaging with the IRS or a tax professional for guidance, correcting inaccuracies with third parties, and considering the inclusion of a corrected return (not an amended return) to support your case are key steps. If you’re feeling less than 100% confident in undertaking any of the steps above, it’s best to contact a tax professional.

Stephen A. Weisberg, Tax Attorney shares his approach to writing effective CP2000 responses for clients.

“When helping clients respond to a CP2000 notice, I focus on clarity, documentation, and tone. The response letter should be factual and concise—acknowledging the IRS’s proposed change, explaining any discrepancies, and attaching clear supporting evidence like 1099s, W-2s, or amended returns.”

“The biggest mistakes taxpayers make are ignoring the notice, sending emotional or argumentative responses, or failing to include documentation that backs up their claims. A well-organized, evidence-driven letter dramatically increases the chance of resolving the issue without escalating to an audit or assessment.”

James Cha, CPA, CTRS outlines a detailed strategy to maximize the effectiveness of a CP2000 response and preserve appeal rights.

“We guide clients to submit a formal, comprehensive cover letter and response package—not an amended return (Form 1040X)... The response must clearly state whether the taxpayer agrees, partially agrees, or disagrees. If disagreeing, we include a written explanation with a corrected tax return copy marked ‘For information only – Do Not Process.’”

“If a penalty is proposed, we contest it with a reasonable cause argument. Most critically, the response must explicitly request an appeal with the IRS Independent Office of Appeals to preserve the taxpayer’s prepayment review rights. If that’s left out, the IRS may proceed directly to assessment.”

A thorough and well-documented response may result in the IRS accepting your explanation and making no changes to your tax liability. The IRS might request additional information to further understand your position. In some cases, disagreements could lead to adjustments in the proposed tax due, penalties, or the need for further clarification. It's vital to prepare for these possibilities by ensuring your response is clear, comprehensive, and supported by relevant documentation.

Discrepancy Due to Identify Theft

If you believe that the information on the IRS CP2000 notice is incorrect because someone is using your name and social security, file a Form 14039, Identity Theft Affidavit. You can find more information on the IRS identity theft information web page.

IRS CP2000 Notice | What is a CP2000 Notice

No Need to Amend Your Return (Usually)

Do not file an amended tax return for the tax year on the notice. The IRS will make corrections on your return if they agree with your response to the CP2000 notice. You may, however, want to file amended tax returns for previous years if you made the same type of error on other returns.

There is an exception. If you need to adjust additional items such as credits or additional income, that are not addressed on your CP2000 notice, you should amend your return. If you do this, write “CP2000” on top of the amended return and attach it behind your completed CP2000 notice response form.

Some tax professionals recommend submitting this, but others disagree, and the answer is often contextual. If you're not sure, we'd recommend talking to a tax professional.

What Happens After You Respond to Your CP2000 Notice

The IRS Accepts Your Explanation

Once the IRS receives your response and supporting documentation that you disagree with the CP2000 notice, they review it. If they accept your explanation, they will send you a letter telling you that the issue has been resolved.

The IRS Partially Accepts Your Explanation

If some but not all of the discrepancies have been resolved, the IRS will send you a CP2000 notice with a new proposed tax calculation. You must respond to this one in the same manner as the first.

The IRS Does Not Accept Your Explanation

If you do not respond or if the IRS does not agree with your response, it will send you a CP3219A, Statutory Notice of Deficiency. This letter informs you of the tax change the IRS plans to make. You can sign that you agree and return the form, or you can opt to appeal in Tax Court. You may also try to work further with the IRS during the statutory notice timeframe.

How Long to Wait After Responding

If you do not hear from the IRS within eight weeks after submitting your response, contact them.

Beware of Tax Scams

The IRS constantly warns of con artists who pose as the IRS to try to scam taxpayers out of money by sending fake letters and other tactics. If you have any doubt that the CP2000 Notice you received is legitimate, you can get more information by reading the IRS article Understanding Your CP2000 Notice or by contacting your tax professional.

Tips to Avoid Getting an IRS CP2000 Notice

The IRS recommends avoiding future problems by

Keeping complete financial and tax records
Not filing tax returns until you have all income statements
Double-checking tax records you get from third parties such as your employer and your bank
Including all your income on your tax return
Correctly reporting income, expenses, and deductions
Filing an amended tax return when you receive new and relevant information that affects your taxes

Another Great Tip to Avoid IRS CP2000 Notices

Work with a licensed tax professional who does tax resolution work. Some tax professionals can predict CP2000 notices up to 6 months before the IRS sends them. They can do this by utilizing software that can help them quickly scan account transcripts for issues. How? The IRS inserts flags into a taxpayer’s account transcript showing that a taxpayer filed a tax return with unreported income. They use Code 922. The IRS sends a CP2000 notice six months after they add code 922 to the account transcript. Therefore, a taxpayer or their representative can prepare an amended tax return before the IRS sends the CP2000 notice. Therefore, the taxpayer can avoid penalties and some interest. The accuracy-related penalty is generally 20% of the understatement of tax if the taxpayer has additional taxes owed of more than $5,000. Therefore, paying a licensed tax professional to monitor your account transcript for a small fee could save you thousands of dollars.

Stephen A. Weisberg, Tax Attorney explains how taxpayers can use IRS transaction code 922 to get ahead of a CP2000 notice.

“Transaction code 922 appears on an IRS account transcript when the IRS identifies a potential underreporting issue—often before sending a CP2000 notice. It’s essentially an internal flag that your return doesn’t match third-party data (like 1099s or W-2s). Seeing TC 922 early gives taxpayers or their representatives a chance to gather documents and respond proactively, reducing the risk of penalties or drawn-out correspondence once the CP2000 officially arrives.”

James Cha, CPA, CTRS offers a deeper look into how TC 922 fits into the IRS Automated Underreporter process.

“IRS Transaction Code (TC) 922 appears on the account transcript to record the date of the last Automated Underreporter (AUR) activity for a specific tax module. If a specialist reviews a transcript and finds a recent TC 922, it signals that the AUR deficiency process is active.”

“If additional tax has already been assessed as a result of the program, the transcript will show TC 290 (Additional tax assessed) associated with TC 922, confirming the adjustment originated from the Automated Underreporter Unit.”

Image saying: Tax Tip: Some tax professionals can actively scan your account transcript for a small fee and predict a CP2000 6 months in advance.

When to Call a Tax Professional

If you receive a CP2000 Notice with a small proposed amount due, contacting a tax professional may not be practical. But if the notice states you owe a substantial amount and you disagree or are not sure of that assessment, a tax professional may be able to help you to save your hard-earned money. Moreover, if a taxpayer has a change on a federal tax return then most likely they need to submit an amended state tax return (if applicable). Start your search below to find a tax professional to help with your tax problem.