Got a CP2000 Notice From the IRS? What It Means and What to Do
A CP2000 is one of the most common IRS letters. It's not an audit and it's not a bill — it's a proposal. Here's what it means and how to respond.
By the Enrolled Agents and CPAs at A&W Tax Services · Updated
What a CP2000 notice means
The IRS matches the income on your return against the W-2s, 1099s and other forms that employers, banks and brokers send it. When those don't match, it sends a CP2000 proposing changes to your tax — usually additional tax, plus interest and sometimes a penalty.
Common causes include a forgotten 1099 from freelance or app-based work, a brokerage 1099-B reported without cost basis, unreported interest, or a retirement distribution.
Your response deadline
The notice gives a response date, usually 30 days from the date on the letter. If you don't respond, the IRS can assess the proposed tax and send a bill. Responding on time keeps all of your options open.
How to respond
- Compare each item on the notice against your records and your return
- If you agree, sign the response form and pay, or set up a payment plan
- If you partly or fully disagree, send a signed statement explaining why, with documents that prove it
- For stock sales, send your cost basis records — this alone often wipes out most of the proposed tax
- Keep a copy of everything you send
When to get help
If the amount is large, the notice involves investments or business income, or you aren't sure the IRS is right, it pays to have an Enrolled Agent respond for you. With a power of attorney, we can review your IRS transcripts, prepare the response and handle the IRS on your behalf.