IRS Tax Problems

Did you receive an IRS CP2000 form, and don't know what to do?

Did you receive an IRS CP2000 form, and don't know what to do?

When the IRS thinks it has found an issue with your tax return, it will contact you via mail with a CP series notice (most commonly a CP2000). Please note that the IRS will never call or e-mail you about a tax delinquency. This is a trick used by scammers that has become quite prevalent.

Most commonly, these notices will include a proposed tax due and any interest or penalties. Included in the notice will be the explanation of the examination process and how you can respond.

These automated notices are sent out year-round and are quite common. As the IRS tries to close the tax gap, it has become more aggressive in its collection efforts. In addition, with some taxpayers using low-quality tax mills or do-it-yourself software, there has been an increase in the number of notices sent over the years because of preparer error. A missed box checked here, a misunderstanding of a credit there, overlooked income—it all adds up. One of the largest self-prepared tax software providers even needed to hire a huge new workforce to help its users deal with the increase in notices caused by novice taxpayers trying to do their own tax returns.

This automated process starts when the IRS matches what you reported on your tax rerun to other data reported by third parties. When this information does not match, this automated collection effort begins.

But don't panic These notices often include errors. But you do need to realize that not responding by the 30-day deadline can have significant repercussions. The first thing to determine is which type of notice you have received. A CP2000 notice is quite different than many of the other CP notices, which deal with identify theft, audit correspondence, earned income credit and much more. Also realize that a CP-2000 notice includes a proposed, and almost always unfavorable, change to your tax return, and it is giving you an opportunity to dispute the proposed change. Procrastinating or ignoring the notice will only cause the IRS to ratchet up its collection efforts and make it increasingly difficult for you to dispute the proposed adjustment.

What to do – If you had your return professionally prepared, you should contact your preparer right away. If you did your own return or had it prepared by one of those tax return mills, you should probably go to TaxBuzz and find a tax professional who is experienced with dealing with the IRS to help you.

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Lee Reams, BSME, EA

Lee Reams, BSME, EA

Editor-in-Chief

Besides his role at CountingWorks as an educator and speaker to thousands of accountants nationwide, Lee manages a technical research service for a large group of tax accountants which sharpens his technical skills. Lee served on the Board of Blackline Systems, is a former Board of Director for the California Tax Education Council, is a Past President of the San Fernando Valley Chapter of Enrolled Agents, Member and Past Director for the California Society of Enrolled Agents.

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