Podcast: Navigating IRS Correspondence: The CP2000 Notice

Navigating Irs Correspondence The Cp2000 Notice

Written by Jeff Dvorachek

May 2, 2024

Welcome to the Tax Insights Podcast, where we break down complex tax topics into bite-sized how-tos. In this episode of Tax Insights Podcast, Jeff Dvorachek gives straightforward tips on how to handle IRS letters, whether it’s a simple mistake or a potential fraud alert.


In this episode of Tax Insights, Jeff sheds light on a common concern: IRS notices. These letters can be alarming, but they’re not necessarily a cause for panic. Jeff explains how to interpret and respond to these notices, emphasizing the importance of timely action and seeking assistance from tax professionals. Let’s dive in!

Host: Well, I see there are some IRS notices that have been going out and it may seem a little bit awkward but some of these seem a bit in the past. Can you explain what’s going on?

Jeff: Oh, sure. So what happens is the IRS gets all this data from third parties, whether it be W2s from your employees or 1099s from other people, maybe investment companies, interest, things like that. And they just kind of accumulate all that information in their system. And then they figured, well, after about two years or so, we’ve collected everything we’re going to collect. So then they take that data and just be a computer to computer compared to the return that you actually filed. And if there’s differences, they kick out a letter. But of course, that letter says, hey, you might be missing something from your 2022 or 2023 return. So it seems like it’s from a long time ago, but it’s how the IRS kind of operates that system.

Host: It’s very important to note it’s a letter, not a phone call or an email, but it is an actual letter you get in your hand in the mail.

Jeff: That’s right, yeah. And they’re fairly popular. They’re called the CP2000 notice, but you’re exactly right. They generally will not. On the first call, they won’t give you a phone call or an email, they’ll do it via mail.

Host: That’s good to know. So these IRS notices, what’s the typical trigger from the computer to computer? What’s the typical trigger that sends out this letter?

Jeff: There could be a lot of different things. You know, maybe there was a W-2 that maybe you forgot to report or didn’t report because you only worked somewhere for a short period of time or maybe you change investment advisors or banks. And so you didn’t get both of those 1099s reported on your return. You know, those are just things where it can just be oversight. But there’s other things that this can really notify you of and that could be some potential fraud. Like, let’s say you get one of these notices and they say you’re missing reporting wages from a job that you had in California and you’re thinking, well, I never worked in California. You know, that could be a trigger to you that, hey, maybe someone’s using my identity.

Host: Wow, that would be huge. And the IRS would deserve a thank you at that point. But what does a typical person do? If you get an IRS notice from, say, a couple of years ago on a tax return, what’s the first step you need to do?

Jeff: Yeah, the first thing is don’t ignore it. So we see some clients who, what they’ll do is they’ll just kind of ignore it and wait for that second notice or maybe even a third notice. But what we tell people is don’t ignore it and also don’t get worried about it. You know, this is really, nobody’s audited your return at this point. Like we talked about earlier, it’s just, it’s a computer to computer and something didn’t match. So the computer automatically kicks out a notice. It doesn’t mean you’re under investigation or anything like that. So, you know, just stay calm, look at the notice and just see what does it actually say and of course respond in a timely manner.

Host: And hopefully you have those records from a couple of years ago, which you should keep. The IRS then gives you that notice and then it could be a simple explanation as you were saying, the next step would be to call them and talk to them and see what’s really going on.

Jeff: Right, you can either call them, you can send them a letter back. What I find is that, you know, sending a letter back probably works the best, but it is the slowest. So sometimes a phone call will be able to solve it.

Host: That sounds good. And should somebody get involved with a tax professional if they get that notice?

Jeff: You know, I think that there’s probably plenty of times that they should because there could be times where, you know, maybe you reported that income on your return, but maybe just somewhere else that the IRS doesn’t see it. You know, maybe it’s, you know, a rental schedule is where that interest went to rather than onto your schedule A or something that’s a little more difficult to explain to the IRS. And those are the times that you probably want to get a tax professional at least talk to one to figure out, okay, what should be my game plan here?

Host: Well, don’t be alarmed. That’s the bottom notice. If you get that IRS notice. And Jeff, how do we get in touch with you if we have any questions?

Jeff: I would go right to our website, which is HawkinsAsh.CPA. And we have a very good CPA-HQ section that you can look at.

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Jeff Dvorachek
As a partner, I have thorough experience providing tax services to individuals, privately held businesses, nonprofit entities and estates and trusts. I also provide compilation and review services.

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